At a Rate of 6

question 73

Multiple Choice

At a rate of 6.25%,what is the present value of the following cash flow stream: $0 at Time 0; $75 at the end of Year 1; $225 at the end of Year 2; $0 at the end of Year 3; and $300 at the end of Year 4?

• A)$433.23
• B)$456.03
• C)$480.03
• D)$505.30

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Definitions:

Not Correlated Stocks

Stocks whose price movements are independent of each other, indicating no direct relationship in their performance.

Volatility

The degree of variation of a trading price series over time, usually measured by the standard deviation of logarithmic returns.

Negatively Correlated Stocks

Stocks that move in opposite directions; when the price of one increases, the price of the other tends to decrease.

Volatility

A statistical measure of the dispersion of returns for a given security or market index, often used to gauge risk.