Suppose that there are 2 securities RAIN and Sun. RAIN pays $100 if there is any rain during the next world cup soccer final. SUN pays $100 if there is no rain. Suppose that the world cup soccer final is 1 year from today and suppose RAIN is trading at a price of $23 and SUN is trading at a price of $70

If you buy 1 share of RAIN and 1 share of SUN, what is your payoff after 1 year, depending on weather?

What does the no-arbitrage condition imply about the price of a 1-year zero coupon bond? (assume no trading costs)

Suppose that a 1-year zero coupon bond is trading at $90. Show how you would set up a transaction to earn a riskless arbitrage profit (assume no trading costs)

Suppose that trading zero coupon bonds is costless, but trading RAIN and SUN each cost $2 per $100 face value. Can you still make an arbitrage profit?