9. Bonus: Consider the following 3 securities that pay perpetual cash flows: • X: pays $42 every odd month; • Y: pays $4

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9 Bonus Consider The Following 3 Securities That Pay Perpetual Cash Flows X Pays 42 Every Odd Month Y Pays 4 1 (100.8 KiB) Viewed 32 times

9. Bonus: Consider the following 3 securities that pay perpetual cash flows: • X: pays $42 every odd month; • Y: pays $42 every even month; • Z: pays $42 every month. Specifically, we can tabulate the cash flows from X, Y, and Z for the first few months as follows: X Y Z end of end of end of end of end of end of month #1 month #2 month #3 month #4 month #5 month #6 $42 0 $42 0 $42 $0 0 $42 0 $42 0 $42 $42 $42 $42 $42 $42 $42 If X sells for $3610.5 and Y sells for $3589.5, what does it imply about: (a) the price of Z? (b) the interest rate per month? (2 pts)