Q: 1-step binomial: S=100, u=1.1, d=0.9, r=5%, K=100 call. Price it. S_u = 110, S_d = 90. Payoffs: 10, 0. Risk-neutral p = ((1.05)-0.9)/(1.1-0.9) = 0.15/0.2 = 0.75. Price: (0.75×10+0.25×0)/1.05 = 7.5/1.05 ≈ ₹7.14. (No arbitrage: risk-neutral!) More steps → Black-Scholes!