Solution-Difference between a perpetuity and an annuity

Difference between a perpetuity and an annuity

Reference no: EM133115733

1. What is the difference between a perpetuity and an annuity?

2. What is the price would you pay for a standard 6% level-coupon bond (with semiannual payments and a face value of $1,000) that has two years to maturity if the discount rate is 5% for half year?

Note: I made it easier for you. In reality you will not see a rate for half year, but it makes your calculation easier for this question.

Reference no: EM133115733

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Difference between a perpetuity and an annuity

Reference no: EM133115733

Reference no: EM133115733

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