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:
“... that’s what living happens to be ... the physiological denial of reverence and good manners and Christianity.... At your age one’s quite old enough to know what the essence of life really is. Shamelessness, that’s all; pure shamelessness.”
—Aldous Huxley (1894–1963)
“When kindness has left people, even for a few moments, we become afraid of them as if their reason had left them. When it has left a place where we have always found it, it is like shipwreck; we drop from security into something malevolent and bottomless.”
—Willa Cather (1876–1947)