Level of interest rate, Econometrics

You have won a contest and are allowed to choose between two prizes. One option is to receive $200 now and another $200 a year from now. The second option is $150 now and $255 a year from now.

(i) At what level of interest rate (if any) is the present value of the two prizes identical?

(ii) If the actual interest rate is below the number you found in your answer above, which of the two options is characterized by higher present value? Explain.

Posted Date: 4/1/2013 3:48:39 AM | Location : United States







Related Discussions:- Level of interest rate, Assignment Help, Ask Question on Level of interest rate, Get Answer, Expert's Help, Level of interest rate Discussions

Write discussion on Level of interest rate
Your posts are moderated
Related Questions
1. (a) Consider a perfectly competitive industry that produces a total output of 190 units in the long run. Suppose there are n identical firms in the market. Each firm then produc

HI, I am currently working on my econometrics assignment which requires me to replicate the result of a published paper. I have been given the same data set as the paper therefore

verify Leibniz rule for differentiation under the integral sign for the following function 2x^2+3xy+3y^2

(b) Suppose that the initial conditions are as follows: y0 = 0 and et = 0 for t= 0. Impose the initial conditions in order to find the general solution.


A thick walled cylinder has internal and external diameters of 120 mm and 420 mm respectively. It is made from a ductile elastic material of your choice and is used to contain hot

Problem: (a) Write down the equation for symmetric GARCH and clearly explain its components. (b) Explain the term ‘volatility clustering'. (c) How would you model leverag

My econometrics assignment is due for monday, August 18th. I''m running out of time and need a help to meet the deadline. I need answers for 4 problems from the basic econometrics.

Problem 1. Consider the demand function Q(p 1 , p 2 , y) = p 1 -2 p 2 y 3 , where Q is the demand for good 1, p 1 is the price of good 1, p 2 is the price of good 2 and y is t

The textbook states, “Prejudice by itself did not create American slavery.” Examine the forces and events that led to slavery in North America, and the role that racial prejudice p