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Consider the investment in one stock asset. The current purchasing price of it is $20. The bet payoff in one year is given below. Market
Consider the investment in one stock asset. The current purchasing price of it is $20. The bet payoff in one year is given below. Market Condition Good Average Bad Probability Dividend Price 0.3 0.4 0.3 $ $ 0 3 1 $ 23 $ 21 $ 17 The risk free rate is 4%. Market risk premium is 6%. The standard deviation of holding-period returns of the market is 20%. The correlation between the bet payoff and the market portfolio is 0.6. What's the correct RADR discount rate (answer with two decimal places, in %)?
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