1. Assume that Ammar choose according to the utility function: UA(Xo, XPH, XPN) = Xo + 3VXPH + 2VXPN And Bob choose according to the utility function UA(Xo, XPH, XIN) = Xo + 4VXe# + VXPu Where Xo represents consumption "today", XPH represents consumption "tomorrow" if PH wins the election and Xor represents consumption "tomorrow" if PN wins. Each person is endowed with RM12k units of the good today. If PH wins, Bob will be endowed with RM 10K but if PN wins, Bob will be endowed with RM3OK. If PH wins, Ammar will be endowed with RM15K and if PN wins, Ammar will also be endowed with RM15K.Storage of the consumption good from today until tomorrow is not possible. a) Find the equilibrium interest rate of r b) Suppose there are markets for two securities: one is a bond that pays $1K per month tomorrow independently of who wins the election; the other security pays $3K per month if the Democrats win and $2K per month if the Republicans win. Determine the equilibrium prices of the securities, how much each person will hold of each security, and what each person's spending stream will be