Which of the Following Is True About Perpetuities

question 85

Multiple Choice

Which of the following is true about perpetuities?

• A) All else equal, the value of a perpetuity is higher when the periodic cash flow is lower.
• B) All else equal, the value of a perpetuity is higher when the interest rate is higher.
• C) If two perpetuities have the same present value and the same interest rate, they must have the same cash flows.
• D) All else equal, the value of a perpetuity is lower when the interest rate is lower.
• E) If two perpetuities have the same cash flows, they must have the same present value.

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