Price the assets-assuming that the risk free rate

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Price the following assets, assuming that the risk free rate is 10%

A) A tree that delivers 10$ worth of fruit every year forever.

B) A tree that delivers 10$ worth of fruit every year for 10 years.

C) A tree that delivers 10$ worth of fruit forever, but only starts delivering fruit 10 years from now.

D) A tree that delivers 100$ worth of fruit with probability 10% and 0 otherwise per year for 10 years.

E) Which tree would you buy? Why?

Reference no: EM13937239

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