The Example of Consol A consol (or perpetuity) that pays $100 annually can be bought and sold at the market for $1000 Want to compare the investment in the bond ($1000)with alternative investment opportunities(e.g, bank deposit) 0: What is the interest rater(or effective rield) consistent with this price?The Example of Consol • A consol (or perpetuity) that pays $100 annually can be bought and sold at the market for $1000. • Want to compare the investment in the bond ($1000) with alternative investment opportunities (e.g., bank deposit). • Q: What is the interest rate R (or effective yield) consistent with this price?