t Problem 2. Consider a single-period model with a bond and a stock. Assume that at time O the value of the stock is 100 and the bond is 1. The value of the stock after one year (i.e. T 1) is equal to 110.2 or 95.2. Suppose that at time T (a) The bond pays a continuously compounded interest rate that is equal to 0.1. Is the market arbitrage-free?If not construct an arbitrage portfolio. (b) The bond pays a periodic interest rate that is equal to 0.1. Is the market arbitrage- free?If not construct an arbitrage portfolio