2. (10 points) We consider one single-period financial market model with two basic assets. The prices of the assets at time 0 and at time 1 are given as follows: p wo and A= [1 1 1] 1 4 6 (a) (5 points) Under what conditions do risk neutral probabilities exist? (b) (5 points) A contingent claim in this model can be written as b = (61, 62, 63). Under what circumstances can this general contingent claim be replicated by the two basic assets? 2. (10 points) We consider one single-period financial market model with two basic assets. The prices of the assets at time 0 and at time 1 are given as follows: p wo and A= [1 1 1] 1 4 6 (a) (5 points) Under what conditions do risk neutral probabilities exist? (b) (5 points) A contingent claim in this model can be written as b = (61, 62, 63). Under what circumstances can this general contingent claim be replicated by the two basic assets? 2. (10 points) We consider one single-period financial market model with two basic assets. The prices of the assets at time 0 and at time 1 are given as follows: p wo and A= [1 1 1] 1 4 6 (a) (5 points) Under what conditions do risk neutral probabilities exist? (b) (5 points) A contingent claim in this model can be written as b = (61, 62, 63). Under what circumstances can this general contingent claim be replicated by the two basic assets? 2. (10 points) We consider one single-period financial market model with two basic assets. The prices of the assets at time 0 and at time 1 are given as follows: p wo and A= [1 1 1] 1 4 6 (a) (5 points) Under what conditions do risk neutral probabilities exist? (b) (5 points) A contingent claim in this model can be written as b = (61, 62, 63). Under what circumstances can this general contingent claim be replicated by the two basic assets