Question textConsider the following model. A(0) = 10,A(1) = 11.5, S(0) = $35, and S(1) has the following distribution 25, with probability Pi S(1) = { 30, with probability p2 45, with probability P3, where p, and p2 and p3 are positive numbers such that p + P2 + P3 = 1. 1) Consider a portfolio with null initial value (i.e. V(0) = 0). Determine the relationship between the components of this portfolio 2) Describe the portfolio with null initial values that have nonnegative value at time ONE for all scenarios (i.e. V(1) > 0 for all scenarios). 3) Does this model admit arbitrage opportunities? Hint: Use your answers in parts al) and 2). 4) Could you replicate a call option with 30 dollars as strike price? Question textConsider the following model. A(0) = 10,A(1) = 11.5, S(0) = $35, and S(1) has the following distribution 25, with probability Pi S(1) = { 30, with probability p2 45, with probability P3, where p, and p2 and p3 are positive numbers such that p + P2 + P3 = 1. 1) Consider a portfolio with null initial value (i.e. V(0) = 0). Determine the relationship between the components of this portfolio 2) Describe the portfolio with null initial values that have nonnegative value at time ONE for all scenarios (i.e. V(1) > 0 for all scenarios). 3) Does this model admit arbitrage opportunities? Hint: Use your answers in parts al) and 2). 4) Could you replicate a call option with 30 dollars as strike price