chapter 6 homework


6.24;Higher expected rate of return generally comes with higher risk.
6.26: The expected payoff is $99. The discounted payoff is $99/(1+5%)=$94286 which is the promised 6.06%
6.28:yes in order for it to be a good investment the rate of return would have to be lower that 7% because Disney may go bankrupt
6.30: Moodys and Standard Porrs are the main rating agencies which are investment and speculative grades Investment grade defaults are less than 5% speculative are around 20%.

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