Suppose that there are three assets traded in the economy: A=(1,2,3),B=(1, 1,1), and C=(2.5,4.5,6.5) a. (6 points) Is the market complete? Explain with supporting calculations. b. (6 points) Suppose that P(A)=2,P(B)=1 and P(C)=5. Explain why the principle of no arbitrage is violated in this economy. (Hint: Replicate stock C using A and B ). c. (8 points) Assume that you can buy and/or sell integer multiples of the three assets. Can you design a trading strategy that will generate arbitrage profit? d. (4 points) Suppose shorting a stock will be charged a borrowing cost of $K per share shorted. Will this eliminate the arbitrage opportunities in this setting? Explain with supporting calculations. Suppose that there are three assets traded in the economy: A=(1,2,3),B=(1, 1,1), and C=(2.5,4.5,6.5) a. (6 points) Is the market complete? Explain with supporting calculations. b. (6 points) Suppose that P(A)=2,P(B)=1 and P(C)=5. Explain why the principle of no arbitrage is violated in this economy. (Hint: Replicate stock C using A and B ). c. (8 points) Assume that you can buy and/or sell integer multiples of the three assets. Can you design a trading strategy that will generate arbitrage profit? d. (4 points) Suppose shorting a stock will be charged a borrowing cost of $K per share shorted. Will this eliminate the arbitrage opportunities in this setting? Explain with supporting calculations