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2. [Optimal Investment] Suppose you have $1000 for investment and there are two potential investment projects A and B. Project A: You pay an investment
2. [Optimal Investment] Suppose you have $1000 for investment and there are two potential investment projects A and B. Project A: You pay an investment cost of $1000 now and receive $1150 after one year. Project B: You pay an investment cost of $1000 now and receive $1300 after two years. (a) Compute the yield to maturity of A and B. Which project is more profitable? Now suppose two other projects are also available for investment. Project C: You pay an investment cost of $1150 one year from now and receive $1600 three years from now. Project D: You pay an investment cost of $1300 two years from now and receive $1650 four years from now
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