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2.Shares of Twatter Ltd trade for $50/share at the moment. Twatter Ltd does not pay dividends. Next period, the price of Twatter Ltd will be
2.Shares of Twatter Ltd trade for $50/share at the moment. Twatter Ltd does not pay dividends. Next period, the price of Twatter Ltd will be $65/share or $40/share. The Arrow-Debreu securities for those two states trade for $0.431 and $0.549, respectively. What is the price today of a security that pays $25 next period if Twatter Ltd shares turn out to be worth $65, and -$10 if they turn out to be worth $40, rounded to the nearest cent? A. 5.49 B. None of the other answers is correct. C. 16.27 D. 2.69 E. 5.29
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