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A risk-averse investor has an opportunity to invest in the following securities: - Security A costs $10 today and will have a value of $25
A risk-averse investor has an opportunity to invest in the following securities: - Security A costs $10 today and will have a value of $25 if the market goes up and $0 if the market goes down - Security B costs $8 today and will have a value of $12 if the market goes up and $6 if the market goes down - Security C costs $5 today and will have a value of $20 if the market goes up and $20 if the market goes down. If there is a 40% chance that the market will go up and the risk-free rate is zero, which security(ies) will the investor prefer? A only B only Conly A and B only
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