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2. (15 points) Risk averse investors require a positive risk premium to compensate for risks they take. Consider VinFast stock (ticker symbol: VFS). Suppose that
2. (15 points) Risk averse investors require a positive risk premium to compensate for risks they take. Consider VinFast stock (ticker symbol: VFS). Suppose that currently VFS stock is trading at $22 a share. Through careful scenario analysis by analysts, in one year, VFS stock will either be at $82 with probability 0.2 or at $8 with probability 0.8. Suppose that one year risk free T-bill rate is 5% per year. Will any risk averse investors buy VFS shares now (if they trust the analyst's analysis) ? Explain. (Hint: You may want to compute the expected rate of return of VFS in the upcoming year based on the current market price and use it to answer the question.)
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