Use the data in the following table to answer the five questions that follow Payoffs in One Year Weak Strong Economy Security Today's Economy Economy Name Price Probability 0.4 0.6 w $44 $100 $0 $50 SO $100 Market $700 $1,500 7) What is the risk-free rate of interest? a) 5.455% b) 6.383% c) 11.531% d) 13.636% e) 113.636% 8) What is today's price of the market? a) $1,180 b) $1,109 c) $1,100 d) $1,058 e) $1,034 9) What is the expected payoff in one year for the market a) $1,180 b) $1,109 c) $1,100 d) $1,058 e) $1,034 10) Security X, not shown in the table, has an expected payoff in one year of $1200 and today's price of X is $1000. What is the expected return of Security X? a) -17% b) 17% c) 20% d) 83% e) 120% 11) Security Z, not shown in the table, has payoffs in one year of $100 if the economy is weak and $200 if the economy is strong. If Security Z is currently trading with a market price of $160, what strategy will create an arbitrage profit? a) Buy 1 unit of Security W and 2 units of Security S and short sell 1 unit of Security Z. b) Buy 1 unit of Security Z and short sell 1 unit of Security W and 2 units of Security S. c) Buy 1 unit of Security S and 2 units of Security W and short sell 1 unit of Security Z d) Buy 1 unit of Security Z and short sell 1 unit of Security S and 2 units of Security W e) No arbitrage is possible because Security Z is properly priced in relation to the other secunities 12) Suppose that a young couple has inst had their fint huhu