Today, you want to sell a $1,000 face value zero coupon bond you currently own. The bond matures in 3.5 years. How much will you
1 answer:
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Answer:
Answer: Option d. 4×
Step-by-step explanation:
In any sequence where ratio of the terms is given we always use the formula
A(n) = A(1)
Here A(n) is the term n
A(1) is the first term
n= number of trms
and r = ration of the terms
Here the given sequence is 40,0.4,0.004........
So A(1) = 40
Ratio 'r' of second and first term is =0.4/40=1/100
We have to find 7th term so n=7
Now we put the values in the formula
A(7) =
=
=
= 40×
= 4×