Sketch of Solutions

Lutz Kruschwitz and Andreas Löffler
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Lutz Kruschwitz: Free University of Berlin
Andreas Löffler: Free University of Berlin

Chapter 7 in Stochastic Discounted Cash Flow, 2020, pp 203-238 from Springer

Abstract: Abstract The first strategy requires an investment of 1 ( 1 + κ t , t + 2 ) 2 $$\frac {1}{(1+\kappa _{t,t+2})^2}$$ and the second one gives a payment of 1 ( 1 + κ t , t + 1 ) ( 1 + κ t + 1 , t + 2 ) $$\frac {1}{(1+\kappa _{t,t+1})(1+\kappa _{t+1,t+2})}$$ which is, by assumption, more. By investing again and again the investor will get infinitely rich.

Date: 2020
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DOI: 10.1007/978-3-030-37081-7_7

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