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1. Consider the following discrete time one-period market model. The savings account is $1 at time 0 and $8 at time 1. The stock price

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1. Consider the following discrete time one-period market model. The savings account is $1 at time 0 and $8 at time 1. The stock price is given by So = 1 and S, = where is a random variable taking two possible values u and d, each with positive probability. Moreover, assume that d

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