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by nopassrecover
3790 days ago
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You seem to be pricing risk at $0. As a simple and relevant example, would you rather invest in a company that has a 10% chance at a 1000% return (but otherwise returns 0%), or take the 2.56% bond? The EV of the first option is 100% return (with high risk), whereas the other is 231% compounded (guaranteed). |
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