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Compare the x terms and equate it to x to the power of zero which is the term independent of x. Extract the powers of x and find the value of r. Since the value of r is a fraction, there is no term in the expansion the has the coefficient of x0 (independent of x).
The binomial option pricing model is a risk-free method for estimating the value of path-dependent alternatives. With this model, investors can determine how likely they are to buy or sell at a given price in the future.
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