Which of the Following Represents the Equation That Would Be

question 40

Multiple Choice

Which of the following represents the equation that would be used to determine the yield to maturity of a three-year fixed payment loan of $1,400 which has payments of $500 per year?

• A) $1,400 = $500/(1 + i) + $500/(1 + i)² + $500/(1 + i)³
• B) $1,400 = $500/(1 + i)³
• C) i = (1,400-500)/1,400
• D) $1,400 = $500/(1 + i) + $500/(1 + i)² + $500(1 + i)³ + 1,400/(1 + i)³

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