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:
“So Lycidas sunk low, but mounted high
Through the dear might of him that walk’d the waves,
Where other groves and other streams along
With nectar pure his oozy locks he laves
And hears the unexpressive nuptial song
In the bless’d kingdoms meek of joy and love.
There entertain him all the saints above
In solemn troops and sweet societies,
That sing, and singing in their glory move,
And wipe the tears for ever from his eyes.”
—John Milton (1608–1674)
“Thanks to recent trends in the theory of knowledge, history is now better aware of its own worth and unassailability than it formerly was. It is precisely in its inexact character, in the fact that it can never be normative and does not have to be, that its security lies.”
—Johan Huizinga (1872–1945)