There are two states of the world, and all income is capital income. In state 1, Home has output of 600, and Foreign has 400. In state 2, Home has output of 400 and Foreign has 600. There is no net international borrowing or lending. What is the best risk-sharing outcome possible?

Portfolios: Home owns _________ % home and ________ % foreign capital

State 1 consumption/income levels: Home _________ Foreign _________

State 2 consumption/income levels: Home _________ Foreign _________

g. There are two states of the world, and all income is capital income. In state 1, Home has output of 600, and Foreign has 400. In state 2, Home has output of 400 and Foreign has 600. There is no net international borrowing or lending. What is the best risk-sharing outcome possible? Portfolios: Home owns % home and % foreign capital State 1 consumption/income levels: Home Foreign State 2 consumption/income levels: Home Foreign