5. (a). Determine if the following model is arbitrage free: 1 12 0

S(0)=(1,2,10),S(1)= 1 3 0 . 1 0 0

1 0 10 If Yes, find a state price vector; if the answer is No, find an arbitrage trading strategy .

(b) If S(0) remains the same but the payoff is changed to 1 12 0

S(1)=1 3 0. 1 0 0

1 0 20

Determine whether the new model is arbitrage free or not. If it is, find a state price vector. Determine whether the new model is complete or not. If so, find the risk neutral probability measure.

Please answer ASAP with full solutions and explanations!!

5. (1). Determine if the following model is arbitrage free: S(0)=(1,2,10),S(1)=11111230000010 If "Yes", find a state price vector; if the answer is "No", find an arbitrage trading strategy . (2) If S(0) remains the same but the payoff is changed to S(1)=11111230000020 Determine whether the new model is arbitrage free or not. If it is, find a state price vector. Determine whether the new model is complete or not. If so, find the risk neutral probability measure. 5. (1). Determine if the following model is arbitrage free: S(0)=(1,2,10),S(1)=11111230000010 If "Yes", find a state price vector; if the answer is "No", find an arbitrage trading strategy . (2) If S(0) remains the same but the payoff is changed to S(1)=11111230000020 Determine whether the new model is arbitrage free or not. If it is, find a state price vector. Determine whether the new model is complete or not. If so, find the risk neutral probability measure