Question: Problem 1 . 3 In table 1 . 3 below, information about the market index, asset A and the risk - free as - set

Problem 1.3
In table 1.3 below, information about the market index, asset A and the risk-free as-
set on a normal market are stated. The nominal risk-free rate next year is 3.5%. The
probability of a recession is 85%.
Table 1.3: Information on prices and cash flows
Calculate the nominal expected return on asset A next year.
Problem 1.3 In table 1.3 below, information about the market index,

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