Which of the following is true about perpetuities?
A)All else equal,the value of a perpetuity is higher when the periodic cash flow is higher.
B)All else equal,the value of a perpetuity is higher when the interest rate is lower.
C)If two perpetuities have the same present value and the same interest rate,they must have the same cash flows.
D)All of the above are true statements.

Question

Quizplus · Accepted Answer

A perpetuity's value increases with higher periodic cash flows and decreases with higher interest rates. If two perpetuities have the same present value and interest rate, they must have the same cash flows.

Which of the Following Is True About Perpetuities