Question
That is two investments. The first one allows you to receive 1,500 e each year, and this in perpetuity (the security is freely transferable to
That is two investments. The first one allows you to receive 1,500 e each year, and this in perpetuity (the security is freely transferable to your heirs). T
he second one allows to receive 3 000 at the end of each year for the next twenty years. Under what conditions is the second investment more interesting? The market data are as follows:
3-month rate: EUR 2 - 2
6-month rate: EUR 3 - 3
12-month rate EUR 4 -
1) What is the interest rate for a loan in 3 months for 6 months?
2) What is the interest rate for a loan in 3 months for 3 months?
3) What is the interest rate for a loan in 6 months for 6 months?
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