If the interest rate is r and will remain r forever, then a bond that will pay 75 dollars a year forever, starting one year from now, is worth how much today?
A) 75/(1 + r) dollars.
B) 75(1 + r) dollars.
C) 75/(1 + r + r2 +.......+ r n +.......) dollars.
D) 75/r dollars.
E) None of the above.
Correct Answer:
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