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Problem 1. Consider a two-period market S with a bond B and an asset S. The interest rate is assumed to be r = 0
Problem 1. Consider a two-period market S with a bond B and an asset S. The interest rate is assumed to be r = 0 and B = 1. The evolution of the asset S is given in the following diagram. Calculate a risk-neutral probability for S (if any). 90 85 80 80 80 78 75 Problem 1. Consider a two-period market S with a bond B and an asset S. The interest rate is assumed to be r = 0 and B = 1. The evolution of the asset S is given in the following diagram. Calculate a risk-neutral probability for S (if any). 90 85 80 80 80 78 75
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