Two possible states can occur next period, A or B. You observe the following securities: 1. Determine
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Two possible states can occur next period, A or B. You observe the following securities:
1. Determine the prices of digital securities that pays off in the two states.
2. Determine the current risk free interest rate.
3. What is the current price of a security that pays $ 20 in state A and $ 25 in state B?
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Related Book For 
Lectures On Corporate Finance
ISBN: 9789812568991
2nd Edition
Authors: Peter L Bossaerts, Bernt Arne Odegaard
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