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You buy a bond for $1,000 today that promises interest of $50 in one year plus the return of your principal. However, the pro
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Answer #1

Answer:

Expected Return (ER) of bond = R1*P1+R2*P2+..............+Rn*Pn

Where R= Expected Return

P= Probability of Return

ER = $1050*0.99+$0*0.01

ER = $1039.5

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