Harbin Manufacturing has 10 million shares outstanding with a current share price of $20 per share. In

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Harbin Manufacturing has 10 million shares outstanding with a current share price of $20 per share.

In one year, the share price is equally likely to be $30 or $18. 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?

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Corporate Finance

ISBN: 9780132992473

3rd Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Mar 15, 2024 01:00 AM

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Harbin Manufacturing has 10 million shares outstanding with a current share price of $20 per share. In

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Corporate Finance

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