Consider a pair of investors A and B who only care about one good wealth at date t = 1. They both know that at date t = l the eoonorny will be either in state 1 or in state 2. They both agree that state 2 is twice as kely as state 1. [11 state 1 A will have the wealth endowment of 3 and B will have the wealth endowment of 15. In state 2 A will have the wealth endowment of 18 and B will have the wealth endowment of I]. Neither investor has any wealth at date ll. At date '0 both investors have access to the nancial markets with the following payoff matrix assets 1 3 states [2 2] The prices of the assets are not specied at the moment, but assume that they are such that there is no arbitrage. Both investors are riskaverse, investor A values wealth y aocording to ny} = 2J5, investor E values wealth 3'; according to HEW} = lay. a. {1 mark) Explain what aggregate risk is. Is there aggregate risk in this econ only?ll b. {2 marks) Suppose investor A's [B's] wealth is to [for sure]. Derive the risk tolerances for investors A and B as functions of w. c. {1 mark} Denote with {911-112} the prices of the above assets. In this notation write the t = fl date budget constraints for hivestors A and B. Recall they are investing into the nancial assets at this point. a. (a mitt] Denote with 354 end y; the state letae of wealth that investor a can reach at date 1. IGiven her wealth endowment at t yl'l and the fact she trades at the market as above what combinations of wealth in{ (15\