Question: Exercise 2 Consider the following model. A(0) = 10, A(1) = 11.5, S(0) = $35, and S(1) has the following distribution 25, with probability P1

Exercise 2 Consider the following model. A(0) = 10, A(1) = 11.5, S(0) = $35, and S(1) has the following distribution 25, with probability P1 S(1) = 30, with probability p2 45, with probability P3, where pi and p2 and p3 are positive numbers such that pi + p2 + p3 = 1. 1) Consider a portfolio with null initial value (i.e. V(0) = 0). Determine the relationship between the components of this portfolio

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