# Showing that the existence of risk neutral probabilities implies and is implied by no arbitrage

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"Part of the fundamental theorem of asset pricing says that a market model is arbitrage free iff risk neutral probabilities exist: prove this for the one period binomial model"

the way I went about this was to use the condition d<$$e^r$$<u for no arbitrage and that probabilities must lie in the interval [0,1], this worked except that I didn't get strict inequalities on the arbitrage condition
commented May 23 by (2,270 points)

Hi Anonymous.

A tutor has looked at your question, but was not sure of the necessity regarding strict bounds. I have asked Alex and will post an Answer once I have one for you.