Exercise 3: Multi-period asset pricing Assume the following state space: Let the spot state prices, qi=qiBt,t+1 and qk=qkBt,t+2, be given by: qi=[qi=1qi=2]=[0.430.5], and qk=qk=1qk=2qk=3qk=4=0.160.180.180.18, respectively. If the payoffs on an asset at t+1 are given by the vector: xt+1=[42] and the corresponding payoffs at t+2 are given by the vector: xt+2=11876 then, showing all the steps in your calculations, you are asked to: (a) Compute the spot value of the asset, St, using the Time-State Preference approach (b) Compute the spot value of the asset, St, using the Rational Expectations approach (c) Explain why the values derived in (a) and (b) are equal. Exercise 3: Multi-period asset pricing Assume the following state space: Let the spot state prices, qi=qiBt,t+1 and qk=qkBt,t+2, be given by: qi=[qi=1qi=2]=[0.430.5], and qk=qk=1qk=2qk=3qk=4=0.160.180.180.18, respectively. If the payoffs on an asset at t+1 are given by the vector: xt+1=[42] and the corresponding payoffs at t+2 are given by the vector: xt+2=11876 then, showing all the steps in your calculations, you are asked to: (a) Compute the spot value of the asset, St, using the Time-State Preference approach (b) Compute the spot value of the asset, St, using the Rational Expectations approach (c) Explain why the values derived in (a) and (b) are equal