Consider an economy populated by two agents, i = A, B. At time 0, the consumption of agent i is given by c. Similarly, at time 1, in states, the consumption of agent i is given by cis. The two agents have the same preferences, U (c) = (10 c) + s[(10 ci)], i = A, B. s=1 (1) There are two states of nature at time 1, and these two states are equally likely. There is a risk-free security and c is the payoff of a traded portfolio. The per capita endowment at time zero and time 1 are given respectively by w = 5, w = z, wi (2,9), and w = (8, y). Finally, the payoff matrix is given by 1 X = 3 2 02 (2) 1. Do we have complete markets? Assume a no-trade equilibrium. What can we say about the values of z and y? Show your work. 2. Compute the equilibrium prices and returns of the three securities. 3. Do we have redundant securities? Why or why not?