Question: Suppose security C has the payoffs shown in the table, the risk-free interest rate is 4%. a. Security C has the same payoffs as what

Suppose security C has the payoffs shown in the table, the

Suppose security C has the payoffs shown in the table, the risk-free interest rate is 4%. a. Security C has the same payoffs as what portfolio of A and B ? b. What is the no-arbitrage price of security C ? c. What is the expected return of security C if both states (weak / strong economy) are equally likely? What is the risk premium? d. If security C had a risk premium of 10%, what arbitrage opportunities would be available

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