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Suppose you have the following information on prices of some assets. The inflation rate is 2%. The one period zero-coupon bond with a face value
Suppose you have the following information on prices of some assets. The inflation rate is 2%. The one period zero-coupon bond with a face value of $100 is sold at a price of $96. There are two states of nature. In state G stock price goes up by 6% and in state B down by 4%. This stock also has a dividend yield of 3%.
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