6. State Preference Theory/Pure Securities a. What is a "pure security" and why are they useful? We have derived the price of the pure security as: E(R,) - r Ps = 1 - 1tr 1+ E(Rs b. Explain each of the elements of a pure security price (above) and explain the economic factors driving them. c. What are complete markets and why are they important to determining security prices? Give an example