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(e) Recall that the premium of an Arrow-Debreau security was the state price. For a strike price K, and an N step binomial model with

(e) Recall that the premium of an Arrow-Debreau security was the state price. For a strike price K, and an N step binomial model with S, u, d and R defined as normal, what is the premium of the binary call option equal to? Answer with a description, not just a formula.

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