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# Answer to Question #49531 in Finance for Prashant

Question #49531
Here are two questions about an economy that has six states,a through f, and six securities, G through L. The securities payoff matrix is X. Some securities may have negative payoffs in some states, you can think of these as forward contracts

G H I J K L
a 18 21 28 5 9 10
b 14 19 8 23 5 -5
Payoff(matrix) X c 8 11 14 -3 27 20
d 6 23 19 -1 26 14
e 19 -4 25 25 20 -10
f 1 -10 22 18 -1 7

1) Is the market complete?
Yes or No?
2)Sam wants a guaranteed income of 25$.Can you create a portfolio from the six securities to do that? If so how many units of securities H must you include in the portfolio? a) -0.498 b) 0.200 c)4.39 d)4.57207 Expert's answer G &nbsp; H &nbsp; &nbsp;I &nbsp; J &nbsp; K &nbsp;L a 18 21 28 &nbsp;5 &nbsp;9 10 b 14 19 &nbsp; 8 23 5 -5 c 8 &nbsp; &nbsp;11 14 -3 27 20 d 6 &nbsp; 23 19 &nbsp;-1 26 14 e 19 -4 &nbsp;25 25 20 -10 f &nbsp; 1 &nbsp;-10 22 18 -1 &nbsp; &nbsp;7 1) The market is complete. 2) If Sam wants a guaranteed income of 25$. We can create a portfolio
from the six securities to do that. The guaranteed income is possible in
state a. In this case (18+21+28+5+9+10)/21 = 4.39 units of securities H
must you include in the portfolio.
So, the right answer is c) 4.39.&nbsp;

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