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A risky corporate bond is currently trading at $80 and is going to be worth either $100 or $40 next year. At the same time,
A risky corporate bond is currently trading at $80 and is going to be worth either $100 or $40 next year. At the same time, a zero-coupon risk-free government bond with a face value of $100 is trading at $100. Consider stock A which is going to be worth either $75 or $15 next year. What is the no-arbitrage value today of stock A?
Group of answer choices
$20.
$45.
$25.
it is impossible to price stock A.
$55.
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