Question #99052
Suppose you paid $1,000 for a perpetuity bond that pays $40 a year. Suppose the interest rate drop fall to 1%. What would be the price of the bond if it continues to pay $40 a year?
1
Expert's answer
2019-11-21T09:17:23-0500

If it continues to pay $40 a year, then it's present value is PV = D/r = 40/0.01 = $4,000.


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Place free inquiry
Calculate the price
Learn more about our help with Assignments: Economics

Comments

No comments. Be the first!
Our fields of expertise
Submit Your Assignment. We Can Do It.
LATEST TUTORIALS
APPROVED BY CLIENTS
Finding a professional expert in "partial differential equations" in the advanced level is difficult. You can find this expert in "Assignmentexpert.com" with confidence. Exceptional experts! I appreciate your help. God bless you!
Canada #340153 on Dec 2023