Suppose the Term Structure of Interest Rates Is Shown Below

question 23

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%

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Definitions:

Abuse

The misuse of power or mistreatment of individuals, causing harm or distress, which can be physical, emotional, or sexual in nature.

Violence as Norm

The acceptance or normalization of violence as a standard or typical behavior within a society or culture.

Peacefulness

The state of being tranquil and free from disturbance or agitation.

Abused or Neglected

Refers to individuals, especially children, who have experienced harmful treatment or a lack of proper care and support.