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A question from the solution manual of “A Primer for the mathematics of Financial Engineering”

LarryChen

LarryChen

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Actually the book is by Dan Stefanica @dstefan . The question is Problem 29 from Chapter 1. The book states that (1.41) holds if and only if the following two conditions are satisfied: x1-x2+x3>=0 and x1(K3-K1)-x2(K3-K2)>=0. How are these two conditions induced? Thank you very much!
 

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