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Title: If the value of security "C" is $180, then what must be the value of security ... Post by: Memphic on Nov 19, 2017 If the value of security "C" is $180, then what must be the value of security "A"?
A) $80 B) $90 C) $100 D) Unable to determine without the risk-free rate. Title: Re: If the value of security "C" is $180, then what must be the value of security ... Post by: anicid on Nov 19, 2017 A
Explanation: A) The cash flows from C are simply a combination of A & B, so price(C) = price(A) + price(B). Since B is already in todays dollars, price(B) must = 100, so price A = 180 - 100 = $80. |