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Prove the following conditions using an arbitrage argument: Ce 0 ( X 1 ) Ce 0 ( X 2 ) < PV ( X 2

Prove the following conditions using an arbitrage argument: Ce0(X1) Ce0(X2)< PV(X2 X1). In your proof, show the initial positive cash flow when the condition is violated and prove that there are no liabilities at expiration.

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