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Suppose that we can describe the world using two states and that two assets are available, asset X an asset Y. We assume the asset’s future prices have the following distribution   State                Future Price Asset X               Future Price Asset Y 1                      $25                                          $50 2                      $20                                          $40   The values of the unit claims implied by these assets are such that:     A. C1 and C2 cannot be determined   B. C1=1 and C2=1   C. C1=1, but we cannot determine C2   D. C1=5/4 and C2=5/4

Suppose that we can describe the world using two states and that two assets are available, asset X an asset Y. We assume the asset’s future prices have the following distribution   State                Future Price Asset X               Future Price Asset Y 1                      $25                                          $50 2                      $20                                          $40   The values of the unit claims implied by these assets are such that:     A. C1 and C2 cannot be determined   B. C1=1 and C2=1   C. C1=1, but we cannot determine C2   D. C1=5/4 and C2=5/4

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Suppose that we can describe the world using two states and that two assets are available, asset X an asset Y. We assume the asset’s future prices have the following distribution

 

State                Future Price Asset X               Future Price Asset Y

1                      $25                                          $50

2                      $20                                          $40

 

The values of the unit claims implied by these assets are such that:

 

  A.

C1 and C2 cannot be determined
  B.

C1=1 and C2=1
  C.

C1=1, but we cannot determine C2
  D.

C1=5/4 and C2=5/4
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