Given the discounted terminal payoff matrix and the current price vectorS (0) = (134). (a) By
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Given the discounted terminal payoff matrix
and the current price vector Ŝ∗ (0) = (134).
(a) By presenting a counter example, show that the law of one price does not hold for this one-period securities model.
(b) How can we modify the current price vector such that the law of one price holds under the modified model?
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