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Finance question, please help!

QUESTION 1 6.66666 point guranteed payments contract $$ uncertairn payments contract $$ time 600 600 600 600 600 600 600 600 600 600 1200 or (0 1200 or (0 1200 or 0 1200 or (0 1200 or 0 1200 or (0 1200 or (0 1200 or 0 1200 or 0 1200 or 0 2 3 4 The uncertain contract is less valuable than the certain contract if the probability of zero returns is 60% in each period True False

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Answer #1

Expected value in uncertain payment=0*60%+1200*40%=480

Value in certain payment=600

As the discount rate for uncertain payment will be higher than certain payment and coupled with lower expected value for uncertain payment, the uncertain contract is less valuable

TRUE

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