Question: is this correct? Consider a security that pays its owner $200 today and $400 in one year, without any risk. Suppose the risk-free interest rate
is this correct?
Consider a security that pays its owner $200 today and $400 in one year, without any risk. Suppose the risk-free interest rate is r=10%. What is the no-arbitrage price of the security today? Around $563.63 Around $600. Around $363.63. Around $545.45
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