Consider the finite probability space {w1, W2, W3}, and let IP be a probability measure such that P[{w}]> 0 for every i = 1, 2, 3. Define the one-period financial market that consists of the probability space (N, F, P), where F:= 22, and the assets S = (S, S, S) which consist of the risk-free asset S and the two risky assets S, S. Their prices at time t = 0 are given by the vector S1 () = = So = = while their prices at time t = 1, depending on whether scenario w,w2 or w3 occurs, are given by the vectors 1 (.). (65) 10 2 3 S1 (W) = 2 S1 (W3) = (1) (i) Show that this financial market admits an arbitrage. (ii) Assume now that S (3) 13 in (1), while all other prices remain the same. Show that this financial market is free of arbitrage and describe the set of equivalent martingale measures.