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Consider the state space model. Suppose there are three states in the economy next year. Suppose the annual riskfree rate is 25.00%. Consider the sets
Consider the state space model. Suppose there are three states in the economy next year. Suppose the annual riskfree rate is 25.00%. Consider the sets of state prices (1,2,3) given below. Check the box next to any set which cannot be a valid set of state prices. (0.28,0.25,0.22) (0.21,0.22,0.47) (0.07,0.30,0.53) (0.05,0.12,0.73)
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