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no arbitrage and security prices the promised cash flows of three securities are lis 735341

No Arbitrage and Security Prices

The promised cash flows of three securities are listed here. If the cash flows are risk free, and the risk free interest rate is 5%, determine the no arbitrage price of each security before the first cash flow is paid.

Security

Cash Flow Today ($)

Cash Flow in One Year ($)

A

500

500

B

0

1000

C

1000

0

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