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(practice) Suppose you have an asset worth $100 and the price will change value over the next 2 years. There is an equal chance of
(practice) Suppose you have an asset worth $100 and the price will change value over the next 2 years. There is an equal chance of a 20% return or a -30% return in each period. What is the expected return of the asset at the end of the second year? Show all your work. Need to address: - The respective payoffs in all nodes (50 points) - The expected return (50 points)
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