A financial instrument will pay off as, Ask an Expert

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A financial instrument will pay off as fo

Probability	50%	25%	12.5%
Payoff	$100	$110	$130
Probability	6.25%	3.125%	3.125%
Payoff	$170	$250	$500

(a) What price today would make this a fair bet?

(b) What is the maximum price that a riskaverse investor would be willing to pay?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91990960

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