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Suppose that you own a security that is going to pay $600 next year, $900 the following year, and $1,800 the year after that. Your
Suppose that you own a security that is going to pay $600 next year, $900 the following year, and $1,800 the year after that. Your friend owns a security that will pay $500 for the next 10 years. If investors can earn a rate of 6.68% in this market, what is the maximum amount that you should be willing to pay your friend to switch the securities (i.e., you will take your friend's security, and your friend takes your security). Answer: \$ (round to the nearest cent)
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