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What if interest rates suddenly rise

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Question: Present Value and Interest Rates. What is the relationship between the value of an annuity and the level of interest rates? Suppose you just bought a 10-year annuity of $7,300 per year at the current interest rate of 10 percent per year. What happens to the value of your investment if interest rates suddenly drop to 5 percent? What if interest rates suddenly rise to 15 percent?

Reference no: EM131728257

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