Compute the risk-neutral probabilities attached to the two stateshigh demand and low demandin Example 12.2. Show that

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Compute the risk-neutral probabilities attached to the two states—high demand and low demand—in Example 12.2. Show that applying these probabilities to value the mine provides the same answer for valuing the outcomes in scenarios 1 and 2 as given in Example 12.2.

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Financial Markets And Corporate Strategy

ISBN: 9780077119027

1st Edition

Authors: David Hillier, Mark Grinblatt, Sheridan Titman

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