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9. An investment pays 3,000 at the end of one year, 2,000 at the end of two years, and 1,000 at the end of three
9. An investment pays 3,000 at the end of one year, 2,000 at the end of two years, and 1,000 at the end of three years. This is valued with a yield of 8% per year. Find: (a) The current price (b) The exact change in value if rates drop to 7.95%. (c) The approximate change using the first term of the Taylor series (first derivative). (d) The approximate change using the first two terms of the Taylor series (first and second derivatives). 9. An investment pays 3,000 at the end of one year, 2,000 at the end of two years, and 1,000 at the end of three years. This is valued with a yield of 8% per year. Find: (a) The current price (b) The exact change in value if rates drop to 7.95%. (c) The approximate change using the first term of the Taylor series (first derivative). (d) The approximate change using the first two terms of the Taylor series (first and second derivatives)
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