Prob 2. APT Following the example in class, we have two securities A and B, both sell at $1 per share. The payoff matrix is given by: Security A State Security B -$2 $4 1 $8 -$1 2 which is the same as what we have in class. Now suppose there is a third security C that sells at $2 per share and pays $1 in State 1 and $3.5 in State 2 1. There is a way to replicate the payoff of security C by combining security A and B. Find out the investment strategy. 2. Based on what you found in Part 1, is there an arbitrage opportunity? Explain why