Question 7 3 pts What are the prices of Arrow securities in this economy? O a1 = 1/4, a2 = 3/4 O a1 = 1/3, a2 = 2/3 O a1 = 1/2, a2 = 1/2 O a1 = 1/4, @2 = 1/2 Question 8 2 pts Suppose the initial wealth of the investor is wo = 10. Denote the desired levels of wealth in states 1 and 2 with w1 and w2. Given the investor has access to the financial market (r, q) as above, what combinations of w1 and w2 are feasible? (Your answer should be the equation that connects w1 with w2.) O W1 + 2w2 = 10 O w1 + 2w2 = 40 O 2w1 + 4w2 = 40 O w1 + w2 = 10 Questions 6-8 are based on the following scenario. Suppose there are two states of the world (at date 1) and there are two risky financial assets a] and a2. Assets' payoffs are given in the matrix (rows are the states, assets are the columns): a1 a2 $1 $2 1 The prices of the assets (a1, a2 ) are q1 = 1, 92 = 1/2. Question 6 2 pts Suppose the investor wants to receive 15 units of wealth in state 1 and 20 units of wealth in state 2. Given the financial market above what portfolio of assets (21, Z2) achieves such wealth combination? O z1 = 15, z2 = 20 O z1 = 7.5, 22 = 12.5 O z1 = 15, z2 = 10 O z1 = 7.5, z2 = 20