Suppose the current time is 0. Consider two European put options on the same underlying stock and
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Suppose the current time is 0. Consider two European put options on the same underlying stock and the same maturity date T, but with different strike prices K_{1} and K_{2}, where K_{1} ≤ K_{2}. The prices of the above options are denoted by P(K_{1}) and P(K_{2}), respectively.
Use noarbitrage arguments to show that
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P(K₁) P(K₂) VI K₁ K₂
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