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Exercise 6.10 For the model of Section 6.2 with n=1, show how an option can be replicated by a combination of borrowing and buying the
Exercise 6.10 For the model of Section 6.2 with n=1, show how an option can be replicated by a combination of borrowing and buying the security. \begin{tabular}{cc} \hline \hline Outcome & Odds \\ \hline 1 & 2 \\ 2 & 3 \\ 3 & 4 \\ \hline \hline \end{tabular} Exercise 6.10 For the model of Section 6.2 with n=1, show how an option can be replicated by a combination of borrowing and buying the security. \begin{tabular}{cc} \hline \hline Outcome & Odds \\ \hline 1 & 2 \\ 2 & 3 \\ 3 & 4 \\ \hline \hline \end{tabular}
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