The following securities are equally risky. For which one will you pay the highest price? Select...
The following securities are equally risky. For which one will you pay the highest price?
Select one:
a. Security A offers $1000 at the beginning of every year for the next five years
b. Security C offers $1000 at the end of every year for the next five years
c. Security D offers $5000 at the end of five years
d. Security B offers $100 at the beginning of every month period for the next 5 years, a total of 60 payments.
Homework Answers
Present value and time period have inverse relationship. If time period increase, present value will decrease and vice-versa. Higher the payment, higher the present value.
Hence, correct option is D
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