Assume that if you buy a security today, you expect to receive 55 payments of $580...
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Assume that if you buy a security today, you expect to receive 55 payments of $580 each, where the first payment will be made today, and all other payments will be made in 63-day (9-week) intervals for the next 3,402 days. Also assume that the annual nominal rate of return that you require is 6.48 percent, but with daily compounding. Given this data, and assuming a 360-day year, determine how much you should be willing to pay for this security. Assume that if you buy a security today, you expect to receive 55 payments of $580 each, where the first payment will be made today, and all other payments will be made in 63-day (9-week) intervals for the next 3,402 days. Also assume that the annual nominal rate of return that you require is 6.48 percent, but with daily compounding. Given this data, and assuming a 360-day year, determine how much you should be willing to pay for this security.
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To calculate the present value of this stream of payments we can use the formula for the ... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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