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. Subscribe to the channel here: @iqinitiative Facebook: Tweeter: