PPT Slide
Arbitrage-free restrictions
Non-existence of arbitrage opportunities is equivalent to the existence
of pseudo probability p0 such that P0(t, 1)/M(t) and P0(t, 2)/M(t) are
martingales; market completeness is equivalent to uniqueness of these
Time 0 long-term zero-coupon bond price is the discounted expected
value of time 1 bond prices using the pseudo probabilities.