Question: Problem 1. [1 point] Consider the single period binomial model. Let C0 denote the price of a European Contingent Claim X at time 0 ,

Problem 1. [1 point] Consider the single period binomial model. Let

Problem 1. [1 point] Consider the single period binomial model. Let C0 denote the price of a European Contingent Claim X at time 0 , and be the replicating strategy for X. If the manufacturing cost of the replicating strategy is greater than C0, i.e., V0()>C0, show that there exists an arbitrage opportunity

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