Find the present value of a perpetuity

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Reference no: EM131585104

1. Assume that the interest rate on a 1-year T-bond is 5.0% and that on a 2-year T-bond is 7.0%. Assuming the pure expectations theory is correct, what is the market's forecast for 1-year rates 1 year from now?

8.59%

8.16%

7.36%

7.75%

9.04%

2. Find the present value of a perpetuity that pays $1000 per year if the nominal interest rate is 6.5%?

$15,788

$15,384.62

$15,250

$15,000

$15,513

Reference no: EM131585104

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