A pure security or primitive security or Arrow-Debreu security is a security that pays 1 currency unit at the end of the period if one particular state of nature is realized and pays nothing if any other state is realized. Market securities can be thought of as portfolios of pure securities, which is a useful abstraction facilitating analysis in many economic contexts.
The concept of the pure securities allows the logical decomposition of the market securities into portfolios of pure securities. Thus every market security may be considered a combination of various pure securities.
Famous quotes containing the words pure and/or security:
“Like most vigorous-minded men, seeing that there was no stopping-place between dogma and negation, he preferred to accept dogma. Of all weaknesses he most disliked timed and half-hearted faith. He would rather have jumped at once to Strong’s pure denial, than yield an inch to the argument that a mystery was to be paltered with because it could not be explained.”
—Henry Brooks Adams (1838–1918)
“A well-regulated militia being necessary to the security of a free State, the right of the people to keep and bear arms shall not be infringed.”
—U.S. Constitution, Second Amendment.