1. Consider the following model with two assets and three states, and suppose that r=0%. n 1 2 Sn(0) 4 10 Sn(1,wi) Sn(1,w2) Sn(1,w2) Sn(1,W3) 6 8 4 12 8 7 Show that there exists a portfolio H which is a sure-thing arbitrage and where H > 3 VW. Write H in vector form. Assuming the asset prices are in USD construct a portfolio with a guaranteed profit of $1,000. 1. Consider the following model with two assets and three states, and suppose that r=0%. n 1 2 Sn(0) 4 10 Sn(1,wi) Sn(1,w2) Sn(1,w2) Sn(1,W3) 6 8 4 12 8 7 Show that there exists a portfolio H which is a sure-thing arbitrage and where H > 3 VW. Write H in vector form. Assuming the asset prices are in USD construct a portfolio with a guaranteed profit of $1,000