1. Consider a oneperiod binomial mode] in which the stock price at time 1 is either 31' = US\" or 3f = d3\" with two constants u, d. Show that -cd-cl+r-=:u precludes arbitrage. Here 1' is one-period interest rate, i.e.: 951 deposit in the bank becomes 1 + it after one period. Let X be the value of a portfolio of cash and stool-rs. For this problem, we need to show that if X\" = and X1 = $331+{1 + T}{Xn lo-5b}: we cannot have X1 strictly positive with positive probability unless X1 is strictly negative with positive probability as well: and this is the case regardless of the choice of the number u