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[Quantitative finance] suppose the payoff of securities tomorrow with two states is : D=[ 1 3 1 1 ] (D is a 2x2 matrix) That
[Quantitative finance]
suppose the payoff of securities tomorrow with two states is :
D=[ 1 3
1 1 ]
(D is a 2x2 matrix)
That is , security one pays $1 in sate1 and pays $3 in state 2; security two pays $1 in state 1 and pays $1 in state 2. Suppose these two securities are priced as $4 and $3 today. What is the price of a third security that pays $10 in state 1 and $0.1 in state 2?
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