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There are two states of the world (S1, S2) on a future date. There are two securities available to investors. Investors in Security A receive
There are two states of the world (S1, S2) on a future date. There are two securities available to investors. Investors in "Security A" receive $50 in S and $150 in S2. Investors in "Security B" receive $100 in Si and have to pay $50 in S, "Security A" and "Security B" are traded at $90 and $5 respectively Compute the state prices s1 and s2. What is the price of risk-tree security in this economy Construct a security that pays $80 in Sh and $60 in S2. Compute its price. You are presented with an investment opportunity in a residential building. The
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