I Ill'lE It'lL LA.\" .43 Guam\" 8 There are two future states and three securities with the associated payments matrix (states by securities) Not yet answered Q 2 (%8 g %g) Marked out of 1.00 The first security current price is 9, the second security current price is 5 and the third security current price is 14. . . . 7 '7 Flag Are there any arbitrage opportunities. question Hint: the calculations do not require matrix inverse. Select one: Q The market is incomplete, and therefore it is not possible to answer this question 0 No, all securities are fairly priced and there are no arbitrage opportunities 0 Yes, there are arbitrage opportunities Question 2 N t t There are two periods: 0 and 'I.A newly formed company wants to invest in an apple tree, which produces apples 0 ye answered only at period 1. There are three states at period 1: good, fair and bad and the tree produces 60; 30 and 20 apples in these states, respectively. The company decides to issue one bond to nance the purchase of the tree and yggked 0m: Of promises to pay the bondholder 13 apples regardless of the realized state. To raise additional funds, the company 'l" Flag also issues one stock. How many apples will the stock pay in the good state? question QUESth" 16 It is given that both a one-year put option and call option on the same underlying stock have a strike price of Y Not Yet and a oneyear zero coupon bond with a face value of Y. To replicate the long put position payoff with the same answer\" underlying stock, an investor needs to Marked out of 2-00 Select one: l, Flag 0 Short stock, long call and long bond question Short stock, short call and short bond Long stock, long call and long bond Long stock, long call and short bond 0000 Long stock, short call and long bond