Question: The Arrow - Debreu model has three states and three assets: one is risk - free and two are risky. The initial price vector is
The ArrowDebreu model has three states and three assets: one is riskfree and two are risky. The initial price vector is
The payoff matrix is:
a Find the state price vector:
b Find the rate of return on the riskfree asset as percentage:
c Find the noarbitrage price of ArrowDebreu security
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