is p, the amount that you had to pay to get the contract, minus A divided by

one plus r, because this was the cash flow that you received at time T equal to zero.

So the net price that you paid for the portfolio is p minus A over one plus r.

Now, let's use the weak no-arbitrage condition.

The weak no-arbitrage condition says that if the cash

flows in the future, and in this particular case there's

only one time in which there is a cash flow in the future in one year.

If the cash flows in the future are greater than equal

to zero, then the price must be greater than equal to zero.

C1 greater than equal to zero implies that the price

of the portfolio Z must be greater than equal to zero.

Price Z is equal to P minus A divided by one plus R.

This must be greater than equal to zero, which means that P

must be greater than equal to A divided by one plus R.