An investment promises four annual payments of €52 over the next four years. You require an 8% return. How much would you be prepared to pay for this asset? The share is currently trading at €165. Would you be prepared to buy or to sell? Why? If you buy at that price, how much will you have gained? Will the rate of return on your investment be greater or less than 8%? Why? If you buy at €172, what will your return on this investment be? Why?

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