Question 1a Suppose you invest 100 today for 13.5 years at a 3.5% continuously compounded rate. What will be the value of your investment in 13.5 years? Question 1b Consider a stock that does not pay any dividends. The stock will worth one of the four possible values with risk neutral probabilities shows below in one year Value in one 40.0 45.0 42.0 20.5 year Risk neutral 0.2 0.2 0.3 0.3 probability In other words, the risk neutral probability that the stock will be worth 40.0, 45.0 42.0 and 20.5 in one year is 20%,20%,30% and 30% respectively. If the effective one-year risk free rate is 10% and the annual cost of capital for the stock is 18%, what is the fair value of the stock today