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Cashflows are paid every n months

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1) An asset with price S at time 0 pays some cashflows. The cashflows are worth C1 with probability p1, C2 with probability p2, and C3 with probability 1-p1-p2. These cashflows are paid every n months (perpetuity). Provide a formula for the asset price S by assuming that the (annualized) discount rate is r.

Reference no: EM131238347

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