C. III

D. Unclear without more information 14. Sarah won a lottery that gives her a choice between two payouts. Neglecting any liquidity or counterparty risk, she simply wants to select the option with the higher present value. Her choices are between an annuity and a perpetuity: I. The annuity will pay her $1,000 every six months, six months from today, over the next ten years; i.e., equivalent to a 2.0% semiannual coupon on $100,000 notional. II. CA perpetuity will pay her $500 every six months but forever The yield curve happens to be conveniently flat at 8.0% at all maturities. The annuity does not pay anything beyond the final $1,000 "coupon" which is why we might refer to a "notional' rather than a "principal." Which of the following is correct? A. Th? annuity has a higher present value regardless of the yield B. The annuity has a higher present value at the current 8.0% yield but not necessarily at any vield C. The p&rpetuity has a higher present value regardless of the yield D. The fierpetuity has a higher present value at the current 8.0% yield but not necessarily at any yield