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The following market model consists of savings account B and the stock St, 0Sts1. Decide...

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The following market model consists of savings account B and the stock St, 0Sts1. Decide if the market model is free from arbitrage by using the First Fundamental Theorem of Asset Pricing. In the case where the model does not admit arbitrage explain how to obtain EMM. In the case when the model admits arbitrage, suggest an arbitrage strategy. Here we are given StSe0B) The following market model consists of savings account B and the stock St, 0Sts1. Decide if the market model is free from arbitrage by using the First Fundamental Theorem of Asset Pricing. In the case where the model does not admit arbitrage explain how to obtain EMM. In the case when the model admits arbitrage, suggest an arbitrage strategy. Here we are given StSe0B)

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