You have just purchased a six-month, $550,000 negotiable CD, which will pay a 8.5 percent annual interest rate. a. If the market rate on the CD rises to 9 percent, what is its current market value? b. If the market rate on the CD falls to 8.25 percent, what is its current market value?

You have just purchased a six-month, $550,000 negotiable CD, which will pay a 8.5 percent annual interest rate. a. If the market rate on the CD rises to 9 percent, what is its current market value? b. If the market rate on the CD falls to 8.25 percent, what is its current market value?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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Question

You have just purchased a six-month, $550,000 negotiable CD, which will pay a 8.5 percent annual interest rate.

a. If the market rate on the CD rises to 9 percent, what is its current market value?
b. If the market rate on the CD falls to 8.25 percent, what is its current market value?

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