Question: (a) (10 marks) Consider the following model for asset S (t) with three outcomes, and suppose that r=0%. Let Q = (q1, q2, (13) be

(a) (10 marks) Consider the following model for asset S (t) with three outcomes, and suppose that r=0%. Let Q = (q1, q2, (13) be the probability measures corresponding to the outcomes (0)1, 602, 093). (i) Find all the riskneutral probability measures. (ii) Hence or othenlvise, show that if Q is a risk-neutral measure then 1 1+c2 11

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