Suppose the state of nature is summarized by the value of the market portfolio which has a discrete probability distribution with possible values of: [$1, $2, $3, $4]. A range of put options with different strike prices are available on the market portfolio:

Put strike Put Prices

2 $0.1

3 $0.6

4 $1.2

5 $2.1

Using the above information to answer questions 13 16

Q13. Calculate the price of the arrow-debreu security that pays $1 in the state where the value of the market portfolio is equal to $2

Q14. Continue with the above what is the risk-neutral probability of this state? Pls round your answer to the third decimal

Q15. What is the price of a riskless bond that pays $2 in each state?

Q16. Consider an exotic asset that pays the square of the value of the market portfolio. What is the price of this exotic asset?