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Suppose there are two states and three financial assets, a risk - free bond with statecontingent cash flows ( 1 0 0 , 1 0
Suppose there are two states and three financial assets, a riskfree bond with statecontingent cash flows a risky bond that pays only in state with cash flow and a share with cash flow Can you find a portfolio containing only shares and risky bonds that reproduces riskfree bonds?
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