Question 2. Consider a two-period model with a representative consumer whose Euler equation is: 1/q = EB(1+r;)1/cz where r is the return on any asset. Let =0.9. Suppose that c1 = 1 and c2 =1.1 or 0.9 depending on the state of the economy, as follows: Good state: C2 = 1.1 Probability = 0.5 Bad state: C2 = 0.9 Probability = 0.5 (a) Determine the size of the relative risk aversion and the elasticity of intertemporal substitution for this representative consumer. (b)Find the price q and the return r on a riskless bond which pays 1 in each state in period 2.(c) Now find the price q and the expected return 7 (i.e. the (weighted) average of the two alternative returns) on a stock which pays 1.1 when cy = 1.1 (i.e. in good state) and pays 0.9 when c2 = 0.9 (i.e. in bad state), so that it is a claim to the consumer's total consumption stream