Solution
= Solution
{c}
The risk-neutral one-step mean multiplier must equal the bank growth factor:
$$
qu+(1-q)d=e^r=1.05.
$$
Thus the <risk-neutral probability in a binomial market> is
$$
\boxed{q=\frac{1.05-0.9}{1.1-0.9}=\frac34,\qquad1-q=\frac14.}
$$
It lies strictly between zero and one, consistent with the no-arbitrage inequality $d<e^r<u$.