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Q18. In the market two risky assets are traded with payoffs S=[2.31.81.10.9] The price of the first risky asset is 2 and of the second

image text in transcribed Q18. In the market two risky assets are traded with payoffs S=[2.31.81.10.9] The price of the first risky asset is 2 and of the second is 1 . There is an investment opportunity that costs 10 . This investment pays off the payoff first asset squared. a. What is the payoff of this investment opportunity? b. What is the replicating portfolio for the payoff of the investment opportunity? c. What is the NPV of the investment opportunity

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