I had to look it up - I don't use LAG very often, and whenever I would use it, I'd have to look it up anyway. I don't know the options it has by memory. Just like CONVERT - I don't remember what all the format numbers are, and I want to double-check my memory for those that I might remember.
Still, one of the options is "around the 1" in the LAG - there isn't a 1 in the question. But it's the default value. I guess those who use LAG a lot would know that.
I would have been tempted to use the COALESCE around the LAG option (implying using a 0 as the 2nd parameter), but when I look it up it says that the first parameter of LAG cannot be an analytic function, so that is out.