Question: please be clear 1. Consider the following model with two assets and three states, and suppose that r=0%. n S(0) S,(1,w) S (1,w2) Sn(1,w3) 1

please be clear

1. Consider the following model with two assets and three states, and suppose that r=0%. n S(0) S,(1,w) S (1,w2) Sn(1,w3) 1 3 3 4 2 29 8 11 5 Show that there exists a portfolio H which is a sure-thing arbitrage and where H > 1 Vw. Write H in vector form. Assuming the asset prices are in USD construct a portfolio with a guaranteed profit of $100. a 1. Consider the following model with two assets and three states, and suppose that r=0%. n S(0) S,(1,w) S (1,w2) Sn(1,w3) 1 3 3 4 2 29 8 11 5 Show that there exists a portfolio H which is a sure-thing arbitrage and where H > 1 Vw. Write H in vector form. Assuming the asset prices are in USD construct a portfolio with a guaranteed profit of $100. a

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