Suppose you have the following information on prices of some assets. The inflation rate is 2%. The one period zero-coupon bond with a face value of 100 is sold at a price of 96. There are two states of nature. In state G stock price goes up by 6% and in state B down by 4%. This stock also has a dividend yield of 3%.

Find State price vector (qG,qB) consistent with observed asset prices.

  • $\begingroup$ Hi, what have you been trying so far? $\endgroup$ – Kermittfrog Dec 7 '20 at 6:23

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