Suppose that a risk-free investment will make three future payments of $250 in one year, $250 in two years, and $250 in three years.

Instructions: Round your answers to 2 decimal places.

a. If the Federal Reserve has set the risk-free interest rate at 4 percent, what is the proper current price of this investment?

b. What is the price of this investment if the Federal Reserve raises the risk-free interest rate to 6 percent?

Guest Nov 23, 2018