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Suppose that all possible types of perpetuities (differentiated in payment starting periods and payment amounts) are traded at fair prices in the market. In this
Suppose that all possible types of perpetuities (differentiated in payment starting periods and payment amounts) are traded at fair prices in the market. In this circumstance, could you find a fair price of all types of annuities?
Justify your answer as follows: If you can, explain how you value an annuity using the market prices of perpetuities. Otherwise, provide an annuity that you cannot value using the market prices of perpetuities.
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