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Hey I need answers to the following along with the workings. Please help Question 1 In the table below, information about the market index, asset

Hey I need answers to the following along with the workings. Please help

Question 1

In the table below, information about the market index, asset X and the risk-free asset on a given

normal market are stated. The risk-free rate next year is 1%

USDCash flow year 1

AssetMarket price((USD)Recession Boom

today(t=0) (p=50%)(p=50%)

Market index500400700

Asset X252.48150450

Risk-free asset247.52250250

In which interval is given the risk premium of asset X (stated in percent) ?

(Hint: start by determining the return of asset X in each state )

*A[17 ; 18]

B.]18 ; 19]

C.]30 ; 31]

D.]12 ; 14]

E.[21 ; 23]

F[28 ; 29]

Question 2

In the table below, information about the market index, asset X and the risk-free asset on a

given normal market are stated. The risk-free rate next year is 0.5%

USD

assetMarket price(usd)Recession Boom

today ( t=0) (p = 50%)p=50%

Market index 10008001,400

Asset X?150750

Risk-free asset?650650

In which interval is the price(USD) of asset X?

a.[610 ; 630 ]

b.]180 ; 200 ]

c.[340 ; 360 ]

*D.[340 ; 360 ]

E.[310 ; 330 ]

f.[290 ; 310 ]

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