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ll Suppose there are two periods: current and future, and three possible states in the future period, Good [G], Fair (F) and Bad (B). Three
ll Suppose there are two periods: current and future, and three possible states in the future period, Good [G], Fair (F) and Bad (B). Three major financial instruments: T-bill, the Nasdaq index fund, and the Dow Jones index fund, are available on the market. They have the following payoffs in each state: The current arbitrage free-price of T-bill is 9.6 and the following information about the arbitrage-free atomic prices is known: PG : 0.26, PB =0.35. Compute the atomic price of the Fair state. Enter your answer using 2 decimal points. C]
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