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
what are factors contributing to the long run trend interms of trade of developing countries?

Choose a share from a market such as LSE, NYSE, NASDAQ, etc. [Data sources could be Datastream, Google Finance or others]. Prepare a report which involves the following aspects:

Probelm: (a) Differentiate between homoscedasticity and heteroscedasticity. (b) Outline the reasons why the variances of disturbance term may vary. (c) Given the 3 observ


This problem refers to Doughtery's Educational Attainment and Earnings Functions (EAEF) data set, accessible through the course website. This data is a subset of the U.S. National


What trends do you see in the Economic, Political, and Cultural environment of society that will affect the industry in the future? Answer) The trends that will affect the indus

#question.Suppose that you have 150 observations on production (yt) and investment (it), and you have estimated the following ADL(3,2) model: (1 – 0.5L – 0.1L2 – 0.05L3)yt = 0.7 +

Define Dummy Variable and write its importance in Regression model.

how do l get a co factor of a matrix