Multiple Choice
Suppose that John can buy a savings bond for $500 that matures in ten years and pays John $1,000 with certainty. He is indifferent between this bond and another $500 bond that has some risk but on which the interest rate is 5% higher. How much, to the nearest penny, does the riskier bond pay in ten years?
A) $1,275.91
B) $1,422.63
C) $1,577.69
D) $1,631.17
Correct Answer:
Verified
Correct Answer:
Verified
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