Consider an economy with two possible states of the world and two securities (i.e., (S=N=2) ), as
Question:
Consider an economy with two possible states of the world and two securities (i.e., \(S=N=2\) ), as in Exercise 4.15, with
\[D=\left[\begin{array}{ll}3 & 2 \\3 & 3\end{array}\right] \quad \text { and } \quad p=\left(\begin{array}{l}1 \\1\end{array}\right)\]
Show that there are arbitrage opportunities but, nevertheless, the market is complete.
Data From Exercise 4.15
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Financial Markets Theory Equilibrium Efficiency And Information
ISBN: 9781447174042
2nd Edition
Authors: Emilio Barucci, Claudio Fontana
Question Posted: