Question: 1. Consider a single-period binomial model with r = 1/5, So = 3, u = 2, d = 1/2, and p= 5/7. Let X be

1. Consider a single-period binomial model with r = 1/5, So

1. Consider a single-period binomial model with r = 1/5, So = 3, u = 2, d = 1/2, and p= 5/7. Let X be a European put option with strike price K = $3, expiring at time T= 1. Compute the arbitrage free price of this option

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