Suppose the Term Structure of Interest Rates Is Shown Below

question 103

Multiple Choice

Suppose the term structure of interest rates is shown below: Consider an investment that pays $1900 certain at the end of each of the next four years. If the investment costs $6650 and has a net present value (NPV) of $142.31, then the four year risk-free interest rate is closest to ________.

• A)4.01%
• B)3.51%
• C)5.01%
• D)4.51%

---

Definitions:

Body Dysmorphic

A mental disorder characterized by obsessive thinking about a perceived flaw in one's physical appearance.

Anorexia Nervosa

An eating disorder characterized by an intense fear of gaining weight and a distorted body image, leading to self-imposed starvation.

Self-Starvation

The deliberate and severe restriction of food intake, often associated with psychological disorders such as anorexia nervosa.

Body Dysmorphic Disorder

Syndrome involving obsessive concern over a part of the body the individual believes is defective.