If the interest rate is r and will remain r forever, then a bond that will pay 95 dollars a year forever, starting one year from now, is worth how much today?
A) 95/(1 + r) dollars.
B) 95(1 + r) dollars.
C) 95/r dollars.
D) 95/(1 + r+r2+........+rn+........) dollars.
E) None of the above.
Correct Answer:
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