What the forward rate unbiasedness hypothesis

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Reference no: EM132002680

1. You are offered an investment which pays you $750 per month for 5 years. You receive the $750 at the beginning of each month. If you require a rate of return of 6%, what is the present value of this investment? Please show work.

2. Calculate the price of one share of such stock when investors require a rate of return of 7% on an issue of 4% preferred stock with a par value of $40.

3. Explain what the forward rate unbiasedness hypothesis (FRUH postulates arguments behind the hypothesis.

Reference no: EM132002680

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