1. A)You own a share in Red Hat. Every period it has a 15 percent chance of going bankrupt. The interest rate is 0. If it survives to the end of the first period, it will pay $2 in dividends, $3 in dividends at the end of the second period, $3 in dividends at the end of the third period, and $4 in dividends at the end of the fourth period. It will pay no dividends after the end of the fourth period What is its efficient market price at the beginning of the first period?

B) Hula Hoops has an eight percent chance of going bankrupt each period. In period seven it will pay $30, if it survives. The interest rate is 0. Prior to that point, and afterwards, it will pay nothing. What is the efficient market price for Hula Hoops at the beginning of period 1?