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[10 points] The promised cash flows of three securities are listed here. If the cash flows are risk-free, and the risk-free interest rate is 5%,
[10 points] The promised cash flows of three securities are listed here. If the cash flows are risk-free, and the risk-free interest rate is 5%, determine the no-arbitrage price of each security before the first cash flow is paid.
Security | Cash Flow Today ($) | Cash Flow in One Year ($) |
A | 500 | 500 |
B | 0 | 1000 |
C | 1000 | 0 |
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