Probability of Probability of State 1 State 2 60% 40% Payoff in Payoff in Security Price Today State 1 State 2 A $2

Finance Dec 25, 2020

Probability of Probability of State 1 State 2 60% 40% Payoff in Payoff in Security Price Today State 1 State 2 A $2.50 $2.00 $4.00 B $3.00 $6.00 $3.00 ? $3.50 $10.00 $2.00 Use the prices and payoffs in the table above. Let a be the number of shares of Security A. and let b be the number of shares of Security B. Solve for the number of shares a and number of shares b which produces the same payoffs as Security C. O a=-1.0 and b 2.0 a=0.5 and b=1.0 O au-2.0 and b=1.0 O a-6.0 and b=-4.0 a=1.5 and b=-2.0

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