Question
1. If you save 1000 in your bank account for 3 years, and if the risk-free annual interest rate is 10%. What is the future
1.
If you save 1000 in your bank account for 3 years, and if the risk-free annual interest rate is 10%.
What is the future value of your bank account at the end of year 3. Or alternatively, what is the future value at the end of year 3.
- 1100
- 1311
- 1351
- 1331
- 1301
2. If the risk-free annual interest rate is 10%.In order to have 1500 in your bank account at the end of year 5, how much money must you put into the bank now (year 0). In other words, what is the present value of 1500.
- 1131
- 1031
- 831
- 931
- 1000
3.
Assume you can get $500 in Year 1, $400 in Year 2, $600 in year 3, $800 in year 4 with 100% probability. Risk-free interest rate is 5%. What is the present value of these future cash flows?
- 2300
- 2015
- 2205
- 1905
- 1800
4. If you buy UK Consols, which provides you interest 5 forever, what is present value of all the future cash flow ? The risk free interest rate is 5%.
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