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A Stock Is Expected to Return 10% When the Risk-Free

Question 13

Multiple Choice

A stock is expected to return 10% when the risk-free rate is 4%.What is the correct discount rate to use for the expected payoff on an option in the real world?


A) 4%
B) 10%
C) More than 10%
D) It could be more or less than 10%

Correct Answer:

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