Annual effective interest rate

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The following two investment options are viewed under an annual effective interest rate of i. Investment A is a 10-year zero coupon bond which redeems at par-value 250. Investment B is a perpetuity-immediate paying an annual payment starting with 4 and having each successive payment increase by X% from the previous payment. If the volatility of each investment is 8, then find the value of X.

Reference no: EM13768240

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