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What is the equity premium

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Consider the binomial asset pricing world where at time f = 0, a share of stock costs So = 50. At time f = 1, we flip a coin, and the stock is worth SI(H) = 100 or S,(7) = 50 if heads or tails occurs respectively. Assume the probability of heads is p = 1/2. If the risk-free Interest rate is r = 0.1, what is the equity premium?

Reference no: EM133233703

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