The Interest Rate Will Be 10% for One More Year

question 21

Multiple Choice

The interest rate will be 10% for one more year, but a year from now, it will fall to 5% and stay at 5% forever.What is the market value of an investment that is sure to pay $220 a year forever, starting two years from today?

• A)$4,000
• B)$4,400
• C)$2,000
• D)$2,200
• E)$5,000

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Definitions:

Fovea

A small depression in the retina where visual acuity is highest due to the dense concentration of cones, responsible for sharp central vision.

Rods

Photoreceptor cells in the retina of the eye that function well in low light and are primarily responsible for black-and-white vision.

Cones

Cells in the eye's retina known as photoreceptors work optimally in well-lit conditions and allow for the recognition of different colors.

Color Receptors

Specialized cells in the retina of the eye responsible for detecting color through the absorption of light at varying wavelengths.