Solution
ID: past-exam-of-the-mathematics-course-of-the-university-of-cambridge/2024/iii/paper-211/1/c/solution
Past exam of the mathematics course of the University of Cambridge 2024 iii Paper 211 1 c Solution by
Codex 0 Created 2026-09-24 Updated 2026-09-25
The fundamental theorem of asset pricing says, in this discrete-time formulation, that the market has no arbitrage if and only if it admits a strictly positive martingale deflator. Under a chosen positive numeraire this is equivalent to the existence of an equivalent martingale measure for numeraire-discounted gains.
New to topics? Read the docs here!