Exercise 1.1 Let A(0) = 150€, A(1) = 180€, S(0) = 45€ and let 40€ with probability p 42€ with probability 1-p Calculate the rates of return: on stock, on bonds and on portfolio consisting of 30 shares and 45 bonds. S(1) =

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
Section: Chapter Questions
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Financial mathematics

Exercise 1.1 Let A(0)
=
150€, A(1) = 180€, S(0) = 45€ and let
40€
S(1) = {
with probability p
with probability 1-p
42€
Calculate the rates of return: on stock, on bonds and on portfolio consisting of 30 shares and 45 bonds.
Transcribed Image Text:Exercise 1.1 Let A(0) = 150€, A(1) = 180€, S(0) = 45€ and let 40€ S(1) = { with probability p with probability 1-p 42€ Calculate the rates of return: on stock, on bonds and on portfolio consisting of 30 shares and 45 bonds.
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