Statements is true of perpetuity

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Reference no: EM132057314

1. Consider a bond that has a present value of $1,000. If the annual rate of interest is 7 percent, the future value of the bond after a year is

- $930.00

- $934.58

- $1,000.00

- $1,070.00

2. A debt security with just one payment at a future date is referred to as a

- coupon bond

- fixed-payment security

- discount bond

- perpetuity

3. Which of the following statements is true of a perpetuity

A perpetuity has a fixed maturity

The present value of each payment made by a perpetuity is less than the previous payment

The present value of a perpetuity that pays $100 every year when the annual rate of discount is 5% is $1,000

The present value of a perpetuity that pays $200 every year when the annual rate of discount is 7% is $1,750

Reference no: EM132057314

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