Consider the sample space = f1; 2; 3g and the probability measure P giving each point weight 1=3. On this probability space consider the nite model with T = 1, S0 0 = S0 1 = 1, S1 0 = 2, and S1 1 (1) = 1; S1 1 (2) = 2; S1 1 (3) = 4: (a) This market is viable, so there is at least one EMM. Find all possible EMMs. (b) Compute V+(X) and V(X) for the contingent claim X given by X(1) = 1; X(2) = 3; X(3) = 9: (c) Find a trading strategy = (01 ; 11 ) such that V1() X and V0() = V+(X). (d) Consider the contingent claim Y given by Y (1) = 2; Y (2) = 4; Y (3) = 8:

x = -3

y = -18

step-by-step explanation:

to solve by substitution, substitute one variable and solve for the other. then substitute again to find the remaining variable.

x-1/3(3x-9) = -3 since y=3x-9 substittute y.

x-1/3(3x-9)=-3

x + x +3 = -3

2x+3=-3

2x+3-3= -3-3

2x=-6

x=-3

substitute again into y=3x-9

y=3(-3)-9

y=-9-9

y=-18

she will travel a distance in the range of 3 - 11 miles

x = 3 ± √(5+y)

answer: on graphs, the open and closed circles, or vertical asymptotes drawn as dashed lines us identify discontinuities.

as before, graphs and tables allow us to estimate at best.

when working with formulas, getting zero in the denominator indicates a point of discontinuity.

when working with piecewise-defined functions, check for discontinuities at the transition points where one piece ends and the next begins.

step-by-step explanation: