Find the value of the infinite fixed annuity

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Reference no: EM131243611

Fixed rate annuity revisited

Suppose annually compounded zero rates for all maturities are a constant r, so Z(0, j) = for j = 1, 2, ....

(a) What is the value today of a fixed annuity that pays 1 each year from T₁ = 1 to T_n = n?

(b) Find the value of the infinite fixed annuity as n → ∞.

Reference no: EM131243611

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