Question: Given the data below, including probabilities for three (3) possible states in the future, what is the return for Bond X ? Ex Ante Prices

Given the data below, including probabilities for three (3) possible states in the future, what is the return for Bond X ? Ex Ante Prices and Cash Flows Today End of Period 1 Bond X Price0=99.00p3=20%p2Price3=100.00p1=30%Price2=101.25Coupon2=2.25Coupon3=2.25Price1=102.00R2=4.54545%R3=3.28283%Coupon1=2.25R1=5.30303% Stock Y p1=30%Price1=130.00=Dividend14.45R1=6.91849% Price 0=125.75p2=50% Price 2=129.25 Dividend 24.47R2=6.33797% p3=20% Price 3=131.00 Dividend 34.50R3=7.75348%

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