1. Suppose security C pays $600 if the economy is weak and $1200 if the economy is strong. Risk free rate is 5% and the market index security (MIS) pays $800 and $1400 is the economy is weak and strong, correspondingly. MIS is priced at $950. Assume that the market is equally likely to be in the weak and in the strong state next year a) What is the no-arbitrage price of security C ? b) What is the expected return of security C