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# 3) Consider the asset pricing model with uncertainty in the slide. We derived the asset prices as Pb = Ps = - [nu' (y+Yn

## 3) Consider the asset pricing model with uncertainty in the slide. We derived the asset prices as Pb = Ps = - [nu' (y+Yn + e) + (1 )u' (y + y + e)] u'(e1) [nu' (y +n + ) + (1 )u' (y + y + e2)] u'(e1) in the class. We showed that p > Ps in the class if u" (x) < 0 for all x > 0. Now prove that p = Ps if u"(x) = 0 for all x > 0. (Hint: u" (x) = 0 for all x>0 means that u'(x) is constant for all x > 0)

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Certainlylets analyze the prompt and prove that Pb Ps when ux 0 for all x 0given the hint Understanding the Problem We have an asset pricing model with uncertainty The prices of two assetsPb and Psare ...### Get Instant Access to Expert-Tailored Solutions

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