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What is the proper current price of the investment

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Reference no: EM132494162

Suppose that a risk-free investment will make three future payments of $500 in one year, $500 in two years, and $500 in three years.

Instructions: Round your answers to 2 decimal places.

Question a. If the Federal Reserve has set the risk-free interest rate at 16 percent, what is the proper current price of this investment?

Question b. What is the price of this investment if the Federal Reserve raises the risk-free interest rate to 18 percent?

Reference no: EM132494162

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