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The promised cash flows of three securities are listed below. If the cash flows are risk-free, and the risk-free interest rate is 6.0%, determine the
The promised cash flows of three securities are listed below. If the cash flows are risk-free, and the risk-free interest rate is 6.0%, determine the no-arbitrage price of each security before the first cash flow is paid.
Security | Cash Flow Today ($) | Cash Flow in One Year ($) | ||
A | 700 | 700 | ||
B | 0 | 1,400 | ||
C | 1,400 | 0 |
The no-arbitrage price of Security A is $ Answer. (Round to the nearest cent.)
The no-arbitrage price of Security B is $ Answer. (Round to the nearest cent.)
The no-arbitrage price of Security C is $ Answer. (Round to the nearest cent.)
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