Question: State Preference Theory/Pure Securities a. What is a pure security and why are they useful? We have derived the price of the pure security as:

State Preference Theory/Pure Securities a. What is a "pure security" and

State Preference Theory/Pure Securities a. What is a "pure security" and why are they useful? We have derived the price of the pure security as: ps=(1+r1)s(11+E(Rs)E(Rs)r) b. Explain each of the elements of a pure security price (above) and explain the economic factors driving them. c. What are complete markets and why are they important to determining security prices? Give an example

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