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QuestionPLZ PLZ HELP ME and the answers on net are wrong 1.

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QuestionPLZ PLZ HELP ME and the answers on net are wrong 1. Write down the… PLZ PLZ HELP ME and the answers on net are wrongImage transcription textConsider a world in which there areonly two dates: 0 and 1. At date 1 thereare three possible states o… Show more… Show moreImage transcription textAssume that atomic (Arrow-Debreu)securities are traded in this economy.One unit of ‘G security’ sel… Show more… Show more?. Write down the consumer’s budget constraint for all times and states, and define a Market Equilibrium in this economy. Is there any trade of atomic (Arrow-Debreu) securities possible in this economy? 2. Write down the Lagrangian for the consumer’s optimisation problem, find the first order necessary conditions, and characterise the equilibrium (i.e., compute the op- timal allocations and prices defined in the equilibrium). 3. At the equilibrium, calculate the forward price and risk premium for each atomic security. What is the results suggest about the consumers’ preference?Suppose that instead of atomic (Arrow-Debreu) securities there are three linearly independent securities, a riskless bond, a stock, and a one-period put option on this stock available for trade in this economy. The riskless bond pays 1 apple in every state, the stock pays 2, 1 and 0 apples in G, F and B, respectively. The put option has a strike price of 1. 4. Write down the budget constraint for each consumer using the newly available securities. 5. Write down the Lagrangian for the consumer’s optimisation problem, find the first order necessary conditions, and characterise the equilibrium (i.e., compute equilib- rium allocations and prices of the newly available securities). 6. Now, price the newly available securities using the atomic prices from part 2. Com- ment on your results in light of the arbitrage-free markets. BusinessEconomicsMicroeconomicsECO 110

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