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Scenario: an Investor Is Considering Three Different Investment Options

question 140

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Scenario: An investor is considering three different investment options. Investing in Option A pays him $4,000 after 6 years, investing in Option B pays him $7,600 after 7 years, and investing in Option C pays him $9,000 after 8 years. If he deposits the amount with a bank, he would receive an annual interest rate of 9 percent.
-Refer to the scenario above.What is the present value of Option C?


Definitions:

Regulation NMS

A set of rules designed to modernize and improve the US National Market System for equity trading.

Financial Markets

Marketplaces where individuals and institutions can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.

Specialists

Professionals on a stock exchange who are responsible for maintaining a fair and orderly market in their specific assigned securities.

Margin Account

An account offered by brokerages that allows investors to borrow money to buy securities, with the securities themselves serving as collateral for the loan.

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