Please review my answers to Questions #1 & #2. Provide solutions for Questions 3-5 (Red Arrows are pointing to)

Worksheet \#2. Work Sheet - Arbitrage Purchase the less expensive package, sell short the more expensive package, pocket the difference, positions cancel out down the road. Suppose VU>VL EU=VU=$1500 Firm sells debt for $900 today, promise to pay back $1000 tomorrow Market prices equity of levered firm at $550 VL=$550+$900=$1450 (1) Stakahnlder nach flntxre (3) Tomorrow's expected pavoff from arbitrage strategv (5) What strategy would you choose if VL>VU