Suppose that all possible types of perpetuities (differentiated in payment starting periods and payment amounts) are tr
Posted: Sun Apr 17, 2022 6:19 pm
Suppose that all possible types of perpetuities
(differentiated in payment starting periods and payment
amounts) are traded at fair prices in the market. In this
circumstance, could you find a fair price of all types of
annuities?
Justify your answer as follows: If you can, explain how
you value an annuity using the market prices of perpetuities.
Otherwise, provide an annuity that you cannot value using the
market prices of perpetuities.
(differentiated in payment starting periods and payment
amounts) are traded at fair prices in the market. In this
circumstance, could you find a fair price of all types of
annuities?
Justify your answer as follows: If you can, explain how
you value an annuity using the market prices of perpetuities.
Otherwise, provide an annuity that you cannot value using the
market prices of perpetuities.