Consider the baseline asset pricing model our slide. Pyu'(Pb(1-9b)+ez) Prove that the function in equation (3) given by (Pb,9v) = increases with po u'(ybqb+ez) (q) i,e show that > 0, if utility function satisfies that for all x > 0, u"(x) 0 Consider the asset pricing model with uncertainty in the slide. P We derived the asset prices as By[itu'(y+yn+ez)+(1-1)u' (y+y1+e)] u'(1) B[tynu' (y+yn+e2)+(1-1)ylu' (y+yi+ez)] Ps = u'(en) in the class. We show that pb >ps in the class if u"(x) 0. Now prove that Pb = = Ps if u"(x) = 0 for all x > 0. (Hint: u'(x) = 0 for all x > 0 means that u'(x) is constant for all x > 0) Solve the following problem. Maxx,y Vx+ Vy s.t. 12x+y,x 20,720 Consider the baseline asset pricing model our slide. Pyu'(Pb(1-9b)+ez) Prove that the function in equation (3) given by (Pb,9v) = increases with po u'(ybqb+ez) (q) i,e show that > 0, if utility function satisfies that for all x > 0, u"(x) 0 Consider the asset pricing model with uncertainty in the slide. P We derived the asset prices as By[itu'(y+yn+ez)+(1-1)u' (y+y1+e)] u'(1) B[tynu' (y+yn+e2)+(1-1)ylu' (y+yi+ez)] Ps = u'(en) in the class. We show that pb >ps in the class if u"(x) 0. Now prove that Pb = = Ps if u"(x) = 0 for all x > 0. (Hint: u'(x) = 0 for all x > 0 means that u'(x) is constant for all x > 0) Solve the following problem. Maxx,y Vx+ Vy s.t. 12x+y,x 20,720