The inital value of S₀ is egal to 10. Thank you.

Let a binomial market with T periods (t = 0,1, ... ,T) with the following assets i) A risk-free asset Bt = (1 + R) (R > 0), ii) An asset with the inital price So = s and the following values t> 0: i. St=uSt-1 with probability 0.5, ii. St=dSt-1 with probability 0.5, where d E (0, 1), u E (1, ) and u >1+R>d. We want to calculate the price of X with the pay-off function given by f, i.e. the value of this derivative at time T, and after j upper movements, is f(su dT -1) (j=0,1, ...,T). using the notion of no arbitrage and the replicating portfolio, demonstrate why the price of the derivate is given by T TI(0, X) = (1 + r)T +(1) led-f(swi dt-i), j=0 where qu=i-d (1+R) R-d and Id= 44+R) Let a binomial market with T periods (t = 0,1, ... ,T) with the following assets i) A risk-free asset Bt = (1 + R) (R > 0), ii) An asset with the inital price So = s and the following values t> 0: i. St=uSt-1 with probability 0.5, ii. St=dSt-1 with probability 0.5, where d E (0, 1), u E (1, ) and u >1+R>d. We want to calculate the price of X with the pay-off function given by f, i.e. the value of this derivative at time T, and after j upper movements, is f(su dT -1) (j=0,1, ...,T). using the notion of no arbitrage and the replicating portfolio, demonstrate why the price of the derivate is given by T TI(0, X) = (1 + r)T +(1) led-f(swi dt-i), j=0 where qu=i-d (1+R) R-d and Id= 44+R)