Show that the no-arbitrage principle implies the strong


1. Show that the no-arbitrage principle implies the strong monotonicity principle.

2. Show that the strong monotonicity principle implies the no-arbitrage principle. Hint: If A is an arbitrage portfolio, apply the monotonicity principle to A and an empty portfolio B to deduce a contradiction.

3. What roles does government assume in relation to health care? Give an example of each role that government plays.

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Financial Management: Show that the no-arbitrage principle implies the strong
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