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:
“Such pure and genuine and childlike love of Nature is hardly to be found in any poet.”
—Henry David Thoreau (1817–1862)
“It is hard for those who have never known persecution,
And who have never known a Christian,
To believe these tales of Christian persecution.
It is hard for those who live near a Bank
To doubt the security of their money.”
—T.S. (Thomas Stearns)