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3. A government bond costing $1,000 promises a 5% interest rate. What is the expected rate of return of my personal bond? Is it higher

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3. A government bond costing $1,000 promises a 5% interest rate. What is the expected rate of return of my personal bond? Is it higher or lower than the expected rate of return of the government bond? Then, how much money would you lend me in exchange for my promise to pay you $1,100 if you want to "break even" (i.e., expect to earn the same $1,100 that you could earn in the government bond.) Q10. A toy company will be worth $3 million, $5 million, or $7 million in 7 years from now. Each of the three states are equally likely. What is the present value of this company if its current cost of capital is 7%per year? Q11. A 2-year project costs $500 and promises the following cash flows

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