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Today you bought 100 shares of abc inc. at $100 per share. a year from now abc will pay a dividend of $2 per share for sure. the price of abc a year from now is uncertain and depends on the state of t
Today you bought 100 shares of abc inc. at $100 per share. a year from now abc will pay a dividend of $2 per share for sure. the price of abc a year from now is uncertain and depends on the state of the economy. a year from now the economy will either be in a recession, a state of "normal" growth, or a boom with probabilities of 30%, 40%, and 30% respectively. after analyzing abc you determine that the price of abc a year from now in these various states of the economy will be: