No-Arbitrage condition
No Arbitrage states the inadmissibility of Free Lunch in applying a structure (metric?) to the prices.
Considering a title with price and cash flow , or every time , where it is the discretized time .
Then we have the two No-Arbitrage condition:
Weak No-Arbitrage : if Strong No-Arbitrage: if and Let’s suppose a world where I can borrow money with fixed interest rate , which will be the price of a product with interest over one year?