What is the relationship between the value of an annuity and the level of interest rates? Suppose
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What is the relationship between the value of an annuity and the level of interest rates? Suppose you just bought a 10-year annuity of $15,000 per year at the current interest rate of 10 percent per year. What happens to the value of your investment if interest rates suddenly drop to 5 percent? What if interest rates suddenly rise to 15 percent?
AnnuityAn annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
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The present value of an annuity falls as r increases and the present value of an annuity ris...View the full answer
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Related Book For 
Essentials Of Corporate Finance
ISBN: 9780073382463
7th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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