... Liquidity and Short Selling) An investor may hold any number x and y of stock shares and bonds, whetherinteger or fractional, negative, positive or zero. In general,x, y ∈ R.The fact that one can ... stock and bonds at every time instant at which there is achange in prices, resulting in considerable management and transaction costs.In some cases it may not even be possible to replicate an ... Prices)All stock and bond prices are strictly positive,A(t) > 0andS(t) > 0fort =0, 1.The total wealth of an investor holding x stock shares and y bonds at atime instant t =0, 1isV (t)=xS(t)+yA(t).The...