Question

Suppose a security with a​ risk-free cash flow of $152 in one year trades for $137 today. If there are no arbitrage​ opportunities, what is the current​ risk-free interest​ rate?

Suppose a security with a risk-free cash flow of $152 in one year trades for $137 today. If there are no arbitrage opportunities, what is the current risk-free interest rate?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

step 1) 137= 152/ (1+r)


step2) 152/ 137= 1+r

1+r= 1.1094890511

1- 1.1094890511= r

r= 0.1094890511

Answer: r= 10.95


answered by: Andrew San Andres
Add a comment
Know the answer?
Add Answer to:
Suppose a security with a​ risk-free cash flow of $152 in one year trades for $137 today. If there are no arbitrage​ opportunities, what is the current​ risk-free interest​ rate?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT