Solution
= Solution
For any holdings $h$, the <pricing kernel> identity implies $V_0=\mathbb E[RV_1]$. If $V_1\geq0$ <almost surely>, then $V_0\geq0$, so an <arbitrage> cannot have $V_0<0$. If also $V_0=0$, then the nonnegative integrable <random variable> $RV_1$ has zero <expectation> and hence is zero <almost surely>. Since $R>0$ <almost surely>, $V_1=0$ <almost surely>, ruling out a positive terminal gain. Therefore \b[a <pricing kernel> rules out <arbitrage>.]