1. Assume that a financial market in discrete-time has two assets: one is risky and one is risk-free. At time t = 0, the price of risk-free asset is A(0) = $100 and the price of risky asset is S(0) = $34. It is known that the return of risk-free asset over any single period is 12%. (a) If a forward contract on the risky asset delivered at the end of first period t = 1 has the forward (8n price F = $38.60, is there an arbitrage opportunity in this scenario? (b) Assume that the price of risky asset has two possible values at the end of first period t = 1 as (8 m given below: s() = { 20 with probability p; 30 with probability 1 - p. where 0