Question: Explain how you would value a derivative that pays off 100R in five years where R is the one-year interest rate (annually compounded) observed in

Explain how you would value a derivative that pays off 100R in five years where R is the one-year interest rate (annually compounded) observed in four years. What difference would it make if the payoff were in (a) 4 years and (b) 6 years?

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