You recently inherited some money and have the opportunity to invest

jagguarpaw January 11, 2017 0 Comments

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Question: You recently inherited some money and have the opp…

You recently inherited some money and have the opportunity to invest it in a government bond which will pay you $55,000 when it matures in 10 years. The bond has an interest rate of 5%, compounded quarterly. Assuming there are no sales or transaction costs, how much would you being willing to pay to purchase the bond, and why?