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There are two states. You are given the payoff information in the table below. In the absence of arbitrage, what is the price of Asset
There are two states. You are given the payoff information in the table below. In the absence of arbitrage, what is the price of Asset
tableAssetPrice,Payoff in state Payoff in state Asset Asset Asset
Hint: do pricing by replication. Can you replicate the payoff of asset using the other two assets?
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