(20 pts) Let ={w1,w2,w3} and T=1 (time to maturity). Consider the market with two risky stocks and one risk-free bond. Suppose the risk-free return R=0.25, and the initial values of the stocks are given by S1(0)=1,S2(0)=1. Moreover (1) (10 pts) Is the market arbitrage free? Justify your answer by finding the risk-neutral probabilities. (2) (10 pts) Consider now a European contingent claim with final payoff H(1)=3, H(2)=4,H(3)=5. If the price of this claim is unique, find the unique initial price H(0). If the price is not unique, find the price range/interval for H(0) of this contingent claim. (20 pts) Let ={w1,w2,w3} and T=1 (time to maturity). Consider the market with two risky stocks and one risk-free bond. Suppose the risk-free return R=0.25, and the initial values of the stocks are given by S1(0)=1,S2(0)=1. Moreover (1) (10 pts) Is the market arbitrage free? Justify your answer by finding the risk-neutral probabilities. (2) (10 pts) Consider now a European contingent claim with final payoff H(1)=3, H(2)=4,H(3)=5. If the price of this claim is unique, find the unique initial price H(0). If the price is not unique, find the price range/interval for H(0) of this contingent claim