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:
“Examinations, sir, are pure humbug from beginning to end. If a man is a gentleman, he knows quite enough, and if he is not a gentleman, whatever he knows is bad for him.”
—Oscar Wilde (1854–1900)
“The horror of class stratification, racism, and prejudice is that some people begin to believe that the security of their families and communities depends on the oppression of others, that for some to have good lives there must be others whose lives are truncated and brutal.”
—Dorothy Allison (b. 1949)