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What is the expected return on Harbin stock

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Reference no: EM132920927

Question - Harbin Manufacturing has 10 million shares outstanding with a current share price of $22.82 per share. In one year, the share price is equally likely to be $31 or $19. The risk-free interest rate is 5%.

a. What is the expected return on Harbin stock?

b. What is the risk-neutral probability that Harbin's stock price will increase?

Reference no: EM132920927

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