Suppose you purchase a perpetuity for $1,000 that pays coupons of $50 - ProProfs Discuss
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Suppose you purchase a perpetuity for $1,000 that pays coupons of $50 per year. If the interest rate changes and becomes 10%, what will happen to the price of the perpetuity?



A. The price will not change and will always equal $1,000 because this bond always pays $50 per year.
B. The price will rise by $50.
C. The price will fall by $50.
D. The price will rise by $500.
E. The price will fall by $500.

This question is part of Money and Banking [Ch.
Asked by Emy_, Last updated: Feb 20, 2020

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1 Answer

John Smith

John Smith

Answered Feb 08, 2017

The price will fall by $500.
 

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