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2. Private debt and capital. (20pts) Consider a lender who lives for two periods, has an endowment y when young and nothing when old, and

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2. Private debt and capital. (20pts) Consider a lender who lives for two periods, has an endowment y when young and nothing when old, and has access to two assets. First1 the lender can issue loans (or borrow) l at interest rate 1' (taken as given). Second, the lender can invest in riskless capital 16, which has a return f (k) = Ala\

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