On this particular question. This is one in which I have gotten stuck on.

Exercise 5.3. Assume a 2-by-2 economy With the state space 0 = {(01, (102} and tow contingent assets St1 and 53, t E {0,T}. Assume that Sf > 0 and 53 > 0. Let 5% (mi) 2 56R}, for some positive constants R}, i,j = 1,2. (a) Derive a simple condition (in terms of R1?) for the completeness of this market model. ~ ~ 2 (b) Find the risk-neutral probabilities 13 = ]P'(a)1) and 1 33 = lP'(w2) such that the discounted price process :41 is a t martingale, ie H 5% 55 EE= r o (c) Assume that the market is complete (i.e., the condition derived in (a) holds). Find the portfolio ((plfpz) that replicates an arbitrary payoff X. Find the formula for no (X)