a. Assume today's discount rate is 6% per year compounded annually. What is the value of a perpetuity that pays $1,000 per year if the first payment is to be received in two years? 

b. If one year from today the discount rate is 5% per year compounded semi-annually, what is the one-year holding period return on the perpetuity from part (a)? 

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a To calculate the present value of a perpetuity with the first payment received in two ye... View the full answer