SOA Exam FM Sample Question 452
Study guide: Exam FM-2
An investment project involves an outlay of 30 at time 0 and 40 at time 1, where time is measured in years. In return the investor will receive 60 at time 2 and 90 at time n, where n \ge 3.
Determine which one of the following statements about the annual effective yield rate is true.
- A) There is a unique yield rate, which is higher than 50%.
- B) There is a unique yield rate, which is lower than 50%.
- C) There are multiple yield rates, but all are higher than 50%.
- D) There are multiple yield rates, but all are lower than 50%.
- E) There are multiple yield rates with at least one lower than 50% and at least one higher than 50%.
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