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Consider two possible sequences of end-of-year returns: 20, 20, 20, 15, 10, 5 and 10, 10, 15, 20, 20, 20. Which sequence is preferable if
Consider two possible sequences of end-of-year returns: 20, 20, 20, 15, 10, 5 and 10, 10, 15, 20, 20, 20. Which sequence is preferable if the interest rate, compounded annually, is: (a) 3%; (b) 5%; (c) 10%?
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