A U.S. Treasury bond will pay a lump sum of $1,000 exactly 4 years from...
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Finance
A U.S. Treasury bond will pay a lump sum of $1,000 exactly 4 years from today. The nominal interest rate is 4%, semiannual compounding. Which of the following statements is CORRECT?
a. The periodic interest rate is greater than 2%
b. The PV of the $1,000 lump sum has a smaller present value than the PV of a 4-year, $200 ordinary annuity
c. The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually
d. None of the above
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