1. Consider the Multi-period Binomial Model (the CRR model) with parameter values as in Exercise 2 on page 28 of the text. Under a forward contract, the holder of a long position in the contract will buy 100 shares of stock at time T = 2 for a fixed (total) price $F. What should F be so that neither the holder of the long position in the contract, nor the holder of the short position (the seller) has an arbitrage opportunity? Identify the relevant European contingent claim, and derive F using arbitrage-free pricing. (Reminder: No money changes hands at time t = 0 when the forward contract is written.) 1. Consider the Multi-period Binomial Model (the CRR model) with parameter values as in Exercise 2 on page 28 of the text. Under a forward contract, the holder of a long position in the contract will buy 100 shares of stock at time T = 2 for a fixed (total) price $F. What should F be so that neither the holder of the long position in the contract, nor the holder of the short position (the seller) has an arbitrage opportunity? Identify the relevant European contingent claim, and derive F using arbitrage-free pricing. (Reminder: No money changes hands at time t = 0 when the forward contract is written.)