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1. An investment will offer $535 per year forever, starting 7 years from today. If the relevant interest rate is 10% per year (as an

1. An investment will offer $535 per year forever, starting 7 years from today. If the relevant interest rate is 10% per year (as an EAR), what is the value of the investment3 years from today? 2. Rank the following bonds in order of absolute safety from default:

a. Agency bond (such as FNMA)

b. A rated municipal bond

c. BBB rated corporate bond

d. U.S. Treasury bond

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