Question
You pay $100 today for a one-year investment that has a 60% chance of paying $110 in one year and a 40% chance of paying
You pay $100 today for a one-year investment that has a 60% chance of paying $110 in one year and a 40% chance of paying $104 in one year. The investment matures in one year (that is, it pays out nothing further after either the $110 or $104 is paid). calculate the expected return of this investment?
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The expected return of this investment can be calculated as the weighted av...
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
