What is the present value of a security

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Question -

(a) If the interest rate is 10%, what is the present value of a security that pays you $24,200 next year and $43,923 two years from now?

(b) Assume that the security that we have considered in part (a) of this question (namely, the security pays you $24,200 next year and $43,923 two years from now) is being sold at the price $50,000. What is the yield to maturity for this security?

(c) When the yield to maturity of one asset is higher than the interest rate, should we buy this asset? Answer to this question and verify your answer. You can use your answers from part (a) and (b) of this question.

Reference no: EM133157475

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