Assume we are at t=0, and we expect that at t=1 the economy has a 50% probability to be strong and 50% probability to be weak. There are two securities traded in the market: A and B. Security A's market price at t=0 is $240, and it pays $600 at t=1 if the economy is strong at that time. Security Bs market price at t=0 is $340, and it pays $600 at t=1 if the economy is weak if the economy is strong. 1.5 Security D pays $1800 at t=1 when the economy is weak or $600 if the economy is strong. What is the no-arbitrage price of security D? 1.6 What is the rate of return for security D? Assume we are at t=0, and we expect that at t=1 the economy has a 50% probability to be strong and 50% probability to be weak. There are two securities traded in the market: A and B. Security A's market price at t=0 is $240, and it pays $600 at t=1 if the economy is strong at that time. Security Bs market price at t=0 is $340, and it pays $600 at t=1 if the economy is weak if the economy is strong. 1.5 Security D pays $1800 at t=1 when the economy is weak or $600 if the economy is strong. What is the no-arbitrage price of security D? 1.6 What is the rate of return for security D