Question: 1 7 . A three - state pricing kernel has the following Arrow - Debreu ( AD ) prices: $ 0 . 2 0 ,

17. A three-state pricing kernel has the following Arrow-Debreu (AD) prices: $0.20, $0.30 and $0.45. What is the risk-free rate of return? [Hint: Think of the cash-flows that a risk-free investment would offer]
A) Cannot be computed with the information given
B)0.95
C)5%
D)5.26%
E)6.32%

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