Q 6.9. Recompute the example from the text, but assume now that the probability of receiving full
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Q 6.9. Recompute the example from the text, but assume now that the probability of receiving full payment in one year on a $200 investment of $210 is only 95%, the probability of receiving $100 is 1%, and the probability of receiving absolutely no payment is 4%. 1. At the promised interest rate of 5%, what is the expected interest rate? 2. What interest rate is required as a promise to ensure an expected interest rate of 5%?
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