Question: Q.5 Work on the following arbitrage problem! PAYOFF TABLE Payoffs for Each Asset and Portfolio For given Stock Price at Expiration -T Position Current CF

Q.5 Work on the following arbitrage problem! PAYOFF TABLE Payoffs for Each Asset and Portfolio For given Stock Price at Expiration -T Position Current CF at t=0 t=1 $250 Asset A $220 $200 $125 Asset-Z - S? $100 I TOTAL VALUE consactions PORTFOLIO TOTAL VALUE trgosestions (PORTFOLIOS) Suppose the price of Asset-Z is $118. Do you have arbitrage opportunity? IF no, WHY? If yes, how can you take advantage of it? You must show your work, which means that transactions you are going to make will lead to arbitrage profit. You may want to use the payoff table I provided in the Blackboard in order to solve this question Also, you must write down the reason (or prove) why your transactions lead to the arbitrage profit

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