The nation of Qatar just issued a perpetual bond. The bond will pay $1,000 in one year and that will grow at 1%/year forever. Because Qatar has more natural gas than any nation in the world, it is a very safe investment and the appropriate discount rate is 4%. Under these facts, what is the appropriate price for this perpetual bond? Choose the closest. a. $20,000 b. $25,000 c. $33,333 d. $50,333
The nation of Qatar just issued a perpetual bond. The bond will pay $1,000 in one year and that will grow at 1%/year forever. Because Qatar has more natural gas than any nation in the world, it is a very safe investment and the appropriate discount rate is 4%. Under these facts, what is the appropriate price for this perpetual bond? Choose the closest. a. $20,000 b. $25,000 c. $33,333 d. $50,333
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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19. The nation of Qatar just issued a perpetual bond. The bond will pay $1,000 in one year and that will |
grow at 1%/year forever. Because Qatar has more natural gas than any nation in the world, it is a very safe |
investment and the appropriate discount rate is 4%. Under these facts, what is the appropriate price for |
this perpetual bond? Choose the closest. |
a. $20,000 |
b. $25,000 |
c. $33,333 |
d. $50,333 |
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