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Q10 (20%) Assume individuals A and B have excess funds of $1000 and $500 respectively. Suppose also that the minimum annual interest rate that A
Q10 (20%) Assume individuals A and B have excess funds of $1000 and $500 respectively. Suppose also that the minimum annual interest rate that A and B are willing to accept are 4% and 5% respectively, for any amount they lend out. Suppose individual C needs $1,000 and knows directly A and B (so that no interme- diaries are required). To overcome this shortage of funds, she issues two promissory notes, each paying $510 in one year. 0 What is the minimum price (per note) that C is willing to accept? I Do individuals A and B accept C's promissory notes when she sells them at this minimum price? 0 Assume each promissory note is sold for $510, and that individuals A and B have excess funds of $1200 and $520 respectively. What is the minimum amount that C needs to promise to pay in one year (per note) in order to raise the funds ($1000) she needs
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