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A financial services product is offered to you. It pays you $100,000 one year from today if the S&P 500 ends in an odd digit
A financial services product is offered to you. It pays you $100,000 one year from today if the S&P 500 ends in an odd digit at the end of the year and $50,000 if the S&P 500 ends in an even digit at the end of the year. You believe the probability of the S&P 500 ending in an odd and even digit are exactly the same at 50% each. The risk free rate is 0% and the MRP is 5%, what is the fair value of this investment today? O Less than $75,000 O More than $75,000 O Exactly $75,000 o We need more information to choose between the answers
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