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1. Stock A has the following returns for various states of the economy:
Probability Stock A's Return Recession
State of the Economy 10% -30%
Below Average 20% -2%
Average 40% 10%
Above Average 20% 18%
Boom 10% 40%
Stock As expected return is?
a. 5.4
b. 7.2
c. 8.2
d. 9.6
Consider a European call option on a non-dividend-paying stock where the stock price is $52, the strike price $50, the risk-free rate is 5%, the volatility is 30%, and the time to maturity is one year. What is the value of the option assuming no poss..
The cost of capital for a project depends on A.
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A Pure Endowment is, in some sense, the opposite of term insurance. All insurance companies sell them. A $1 n-year pure endowment pays $1 at time nyear if the insured is alive. A $1 n-year Endowment (distinct from “pure” endowment) is as follows:
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