complete a-e

Complete a-e. the risk-free interest rate is 4%

w nowe noge prices on secure and and the cows for securry under con scerano new economy and the song economy scenarios-00 (nannunal Fant in order to copy its contents into a spreadsheet) Cash Flow in One Year Market Price Today Strong Economy Security Security A Security B Security C $231 $346 Weak Economy $0 $600 $600 $000 $0 $1,800 a. Security C has the same payoffs as what portfolio of the securities A and B? b. What is the no-arbitrage price of security C? c. What is the expected return of security C if both states are equally likely? What is its risk premium? d. What is the difference between the return of security C when the economy is strong and when it is weak? e. If security C had a risk premium of 10%, what arbitrage opportunity would be available? a. Security C has the same payoffs as what portfolio of the securities A and B? This combination is: (Select the best choice below) OA C-A 3xB OB. C-3xA+2xB OC C-3xA+B OD C-4xA+3xB The table below shows the no-arbitrage prices of securities A and B and the cash flows for security C under both scenarios the weak economy and the strong economy scen Cash Flow in One Year Weak Economy Strong Economy Security Security A Security B Market Price Today $231 $346 50 $600 SO $1,800 $600 $600 Security C a. Security C has the same payoffs as what portfolio of the securities A and B b. What is the no-arbitrage price of security C? c. What is the expected return of security C if both states are equally likely? What is its risk premium? d. What is the difference between the return of security C when the economy is strong and when it is weak? e. If security C had a risk premium of 10%, what arbitrage opportunity would be available? a. Security C has the same payoffs as what portfolio of the securities A and B? This combination is (Select the best choice below) OA. C=A+3xB OB. C-3xA+2xB OC. C=3xA+B OD. C=4xA+3xB