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4. There are S=3 states and N=3 securities with payoffs D=406080204060101010 and prices p=[54,36,9] (a) Describe the set of all state-price vectors. (b) Is this
4. There are S=3 states and N=3 securities with payoffs D=406080204060101010 and prices p=[54,36,9] (a) Describe the set of all state-price vectors. (b) Is this market complete? Explain. (c) Does this market permit arbitrage opportunities? Explain. (d) Consider two additional payoffs in this market, X=[150,200,250] and Y=[100,275,400]. Which of the following statements is/are true for all pairs of distinct state-price vectors 1 and 2. (Distinct means that 1=2.) (a) 1X=2X (b) 1Y=2Y 4. There are S=3 states and N=3 securities with payoffs D=406080204060101010 and prices p=[54,36,9] (a) Describe the set of all state-price vectors. (b) Is this market complete? Explain. (c) Does this market permit arbitrage opportunities? Explain. (d) Consider two additional payoffs in this market, X=[150,200,250] and Y=[100,275,400]. Which of the following statements is/are true for all pairs of distinct state-price vectors 1 and 2. (Distinct means that 1=2.) (a) 1X=2X (b) 1Y=2Y
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