2. Consider a risk-averse investor with time-separable utility function u(ct) in t and u(ct+1) in t+1 who selects the quantity hS of a risky stock and the quantity hB of a risky corporate bond to buy today t. Denote the time t prices by St and Bt for the stock and the bond, respectively. Assume that the investor's exogenous initial wealth is wt, and that the intertemporal discount factor is . (a) Set up the investor's maximization program. (b) Write the first-order conditions for this problem. Are they sufficient? (c) Assume u(c)=lnc. Write the stochastic discount factor/pricing kernel for this utility function. (d) Assume =0.99 and ct=1000. There are 4 possible states of nature tomorrow. Consumption and the payoffs of the bond are the following: Compute the price of the bond, Bt. 2. Consider a risk-averse investor with time-separable utility function u(ct) in t and u(ct+1) in t+1 who selects the quantity hS of a risky stock and the quantity hB of a risky corporate bond to buy today t. Denote the time t prices by St and Bt for the stock and the bond, respectively. Assume that the investor's exogenous initial wealth is wt, and that the intertemporal discount factor is . (a) Set up the investor's maximization program. (b) Write the first-order conditions for this problem. Are they sufficient? (c) Assume u(c)=lnc. Write the stochastic discount factor/pricing kernel for this utility function. (d) Assume =0.99 and ct=1000. There are 4 possible states of nature tomorrow. Consumption and the payoffs of the bond are the following: Compute the price of the bond, Bt