dont just answer, please explain as more as you can. thanks.

Consider a multiplicative binomial model with N = 3, r = 0, U = 1.2, d = 0.8 and S O = 100. At time t = 1 when S 1 = 120 a (european) call option with maturity at T = 3 and struck at 100 is quoted at 25. Is that a fair value? If yes explain why? If not explain why and explicitly define an arbitrage strategy (you have to give details of the arbitrage strategy) Consider a multiplicative binomial model with N = 3, r = 0, U = 1.2, d = 0.8 and S O = 100. At time t = 1 when S 1 = 120 a (european) call option with maturity at T = 3 and struck at 100 is quoted at 25. Is that a fair value? If yes explain why? If not explain why and explicitly define an arbitrage strategy (you have to give details of the arbitrage strategy)