An economy consists of three assets. At time t = 0, the assets all have market value 1. At time t = 1, the price of the assets will depend on which of two possible states the economy is in. The prices of the assets are given in the table below. Asset 1 Value at value at time t = 1 t=0 state 1 State 2 1 1.05 1.05 1 1.03 1.07 1 1.09 1.04 2 3 Explain whether an arbitrage opportunity exists and, if so, how it could be exploited. An economy consists of three assets. At time t = 0, the assets all have market value 1. At time t = 1, the price of the assets will depend on which of two possible states the economy is in. The prices of the assets are given in the table below. Asset 1 Value at value at time t = 1 t=0 state 1 State 2 1 1.05 1.05 1 1.03 1.07 1 1.09 1.04 2 3 Explain whether an arbitrage opportunity exists and, if so, how it could be exploited