What Is the Present Value of a $600 Annuity Payment

question 20

Multiple Choice

What is the present value of a $600 annuity payment over 4 years if interest rates are 6 percent?

• A) $475.26
• B) $757.49
• C) $2,079.06
• D) $3,145.28

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Definitions:

Well-Diversified Portfolios

Investment portfolios that are spread across various assets to minimize exposure to any single asset or risk.

Arbitrage Opportunities

Situations in which it is possible to simultaneously buy and sell an asset or assets to profit from a difference in prices across different markets or formats without risk.

Expected Excess Return

The return on an investment over the risk-free rate of return that is anticipated based on risk assessment.