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Instructions 3/3
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Besides investing in the stock, you will also have the option to invest in a risk-free bond. The risk-free bond offers a return of 2% for sure. This means that, no matter how the stock performs or if you are unemployed or not, the bond will always pay out 2%. Below you can see an illustration of how this will look like.
1$ invested in the bond will always be worth 1.02$ at the end of the year, regardless if you are in the upper or lower branch.