No-Arbitrage and Security Prices The promised cash flows of three securities are listed here. If the

No-Arbitrage and Security Prices

The promised cash flows of three securities are listed here. If the cash flows are risk-free, and the risk-free interest rate is 5%, determine the no-arbitrage price of each security before the first cash flow is paid. Security

Cash Flow Today ($)

Cash Flow in One Year ($)

A

500

500

B

0

1000

C

1000

0

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