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Suppose: Your gross salary is currently 45K annually. Your boss offers you to switch to a market-based contract: $30 K if the market is down

  2. Suppose:

Your gross salary is currently 45K annually. Your boss offers you to switch to a market-based contract:

$30 K if the market is down or $80 K if the market is up, the market is equally likely to go up or down. That offer leaves you indifferent between current compensation and the risky contract. determine your minimum required risk premium that makes you switch to the risky contract





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