6 Assume an economy with three assets (trees). Asset 1 pays a unit of consumption in all odd periods and zero in even periods. Asset 2 pays a unit of consumption in all odd periods and zero in even periods. Asset 3 pays a unit of consumption in all even periods and zero in odd periods.

(a) Compute the value of each of the three assets in (i) odd periods (ii) even periods.

Assume that β = 0.95 and U(C) = ln(C).

(b) Assume that we multiply the amount of dividends paid by each of the three assets.

Will this change your answer to (a)?

(c) Assume that we add a fourth asset that yields 1 unit in all periods (even and odd).

Will this change your answer to (a)?