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Suppose we have a market with two tradeable assets (as in the basic model of the previous chapter). For the risky asset we have S

Suppose we have a market with two tradeable assets (as in the basic model of the previous chapter). For the risky asset we have S with S (0) = 0, S (1, ) > 0 and S (1, ) < 0. The riskless asset is the same as before. Now derive again (2.12) but using S in place of S. Give an example for S .

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