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Suppose there are three states of nature and three traded assets with the following payoffs. Each column represents an asset and each row represents a
Suppose there are three states of nature and three traded assets with the following payoffs. Each column represents an asset and each row represents a state of nature. (102 Payoff = {2 1 2 (3 3 1 Price = {1.5 (1.4 - - Find out the risk free interest rate. Hint: First figure out the replication portfolio for risk free asset. II Given the current information please find out the price of the following three assets. (100) Payoff = {0 1 0 0 0 1 111 Based on question II, what is the price of the following asset? Payoff = 30
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