Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are given the following partial table Year r* Avg. r* IP AVG. IP 1 2,500 2,500 1,000 1,000 3,500 3,500 2 2,500 2,000 4,500

You are given the following partial table

Year

r*

Avg. r*

IP

AVG. IP

1

2,500

2,500

1,000

1,000

3,500

3,500

2

2,500

2,000

4,500

5,500

3

2,500

2,600

4

2,500

5,000

3,200

5,700

5

2,500

2,500

6,200

6

2,500

2,500

4,400

3,000

6,400

6,900

7

2,500

3,200

5,700

Now assume that the Liquidity Preference theory is correct (versus the data for the Pure Expectations Theory above), and the Maturity Risk Premium can be defined as (0.16%)(t-1), where t is the number of years until maturity. Given this information determine how much $41,000 to be deposited at the beginning of Year 3, and held over Years 3,4,5, and 6 (4 Years0, would be worth at the end of Year 6.

Answers: A) $55,429.67

B) $56,781.61

C) $58,133.55

D) $59,485.50

E) $60,837.44

Pls do not use excel to explain this to me. Thank you

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Stocks Analysis A Fundamentalist Approach

Authors: Luciano Storelli ,Storelli And Pepe Stocks Investments

1st Edition

979-8395523006

More Books

Students also viewed these Finance questions

Question

Which job has the highest revenue?

Answered: 1 week ago

Question

How many jobs underperformed on profit margin?

Answered: 1 week ago