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Use the following information for questions .
There are two possible states of nature, s = 1, and s = 2, over the next period.There are two securities i and j) whose current prices are $10 and $15, respectively.Security i has a payoff of $10 in state s = 1, and $16 in state s = 2, while security j provides $25 in state s = 1 and $8 in state s = 2.
-A third security is introduced.It generates a payoff of $16 in state s = 1 and $24 in state s = 2.How many units of this new security can you buy if your initial wealth is $3,100?


A) 200 units
B) 162 units
C) 154 units
D) 127 units
E) More information is needed

Correct Answer:

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