OptiverTrader InternQuantitative Trader InternQuestion #66
In a perfectly efficient market, there are two companies: A with a success probability of 2/3 and B with a success probability of 1/2. Both companies are initially worth $50 each. If both companies either succeed or fail, nothing special happens. However, if one company succeeds and the other does not, then the company that does not succeed goes bankrupt. How would the price of each company change if both succeed?
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