Question: You are considering buying a 1-year maturity security that has a 40.00% chance of paying you $100 in one year and a 60.00% chance of
You are considering buying a 1-year maturity security that has a 40.00% chance of paying you $100 in one year and a 60.00% chance of paying you $140 in one year. You are willing to pay at most $103.00 a. What is your required rate of return (express as a percent, e.g., if you solved for 0.1512, it should be expressed as '15.12%)? b. If you are able to buy the security for $102.00, what is your expected rate of return? (Express as a percent rate of return.expressed as and accurate to XX.XX%, nota dollar amount.) c. Now suppose you did not pay $102.00, but some different price, $P. If you buy the security and 1 year later the security paid $140 and find that your realized rate of return is 36.5854%, what price $P did you pay? Tb (Ctn)
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