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For each of the following statements, state if they are TRUE or FALSE. Please justify your answers. a. Consider the market with basis assets whose
For each of the following statements, state if they are TRUE or FALSE. Please justify your answers. a. Consider the market with basis assets whose payoff matrix is A = 1 0 3 2 3 1 3 1 2 . This market is complete. b. Consider the static model we have discussed in class. In particular, consider a complete market without redundant assets. In this case, a state price vector certainly exists. c. A decision involves risk if it leads to consequences that are not precisely predictable, but follow a known probability distribution. d. According to the consumption CAPM, the more impatient investors are, the higher the state prices are
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