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Please answer in detailed steps. Exercise 5.10. Three assets A,B, and C have market prices and payoffs as given in the table below: (a) Construct

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Please answer in detailed steps.

Exercise 5.10. Three assets A,B, and C have market prices and payoffs as given in the table below: (a) Construct a portfolio [A,B] in assets A and B that replicates the payoff of asset C. (b) Determine the present time- 0 value of the replicating portfolio. Is there a possible arbitrage in this market? Explain. (c) Determine whether or not assets A and B form the basis for a complete arbitrage-free two-state market. If so, obtain the risk-neutral probabilities

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