Show that when and g provide income at rates q, and qg, respectively, equation (25.15) becomes (Hint:
Question:
Show that when and g provide income at rates q, and qg, respectively, equation (25.15) becomes
(Hint: Form new securities f* and g* that provide no income by assuming that all the income from f is reinvested in f and all the income in g is reinvested in g.)AppendixLO1
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