1. Consider a one-period economy with two times, 0 and T. There are S=3 states and N=2 securities with payoffs D=10101091011 and prices p=[10,10]. (a) Does this market satisfy the Law of One Price? Explain why or why not. (b) Using the Fundamental Theorem of Asset Pricing, determine whether or not the price system admits arbitrage. (c) What is the equilibrium price of a call option on Security 2, with exercise price 10, and expiring at t=T ? 1. Consider a one-period economy with two times, 0 and T. There are S=3 states and N=2 securities with payoffs D=10101091011 and prices p=[10,10]. (a) Does this market satisfy the Law of One Price? Explain why or why not. (b) Using the Fundamental Theorem of Asset Pricing, determine whether or not the price system admits arbitrage. (c) What is the equilibrium price of a call option on Security 2, with exercise price 10, and expiring at t=T