Question
consider that we have one stock, ZEE Electronics, that today is worth $50 and one period later will be worth either $75 or $40. We
consider that we have one stock, ZEE Electronics, that today is worth $50 and one period later will be worth either $75 or $40. We will denote these prices as ZEE = $50, ZEE+ = $75, and ZEE = $40. Another stock, CYT Technology, is today worth $38 and one period later will be worth $60 or $32. Thus, CYT = $38, CYT+ = $60, and CYT = $32. Assume that the risk- free borrowing and lending rate is 4%. Also assume no dividends are paid on either stock during the period covered by this example. Find arbitrage return for ZEE and CYT technology, if exist
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