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Q6 (4 pts) There are two possible states of the world tomorrow: rain or sun. Asset A has a price of $1.60 and pays off

image text in transcribed Q6 (4 pts) There are two possible states of the world tomorrow: rain or sun. Asset A has a price of $1.60 and pays off $1.50 if it rains and $2.00 if it is sunny. Asset B has a price of $2.25 and pays off $2.50 if it rains and $2.00 if it is sunny. Assuming there is no arbitrage opportunity, what is the price of an asset that pays off $1.00 if it rains and nothing if it is sunny? A. $0.65 B. $1.00 C. $1.15 D. $2.25 E. $3.85

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