A European binary (or Digital) option pays $4 if the stock ends above $64 after 3 months and nothing otherwise. The following 3-period binomial tree represents the monthly stock price movements: Assuming cont. compounded interest rate of r=4% and no dividends, find the replicating portfolios for each date if the stock prices moves according to S(0)=60S(1)=63.6S(2)=61.06S(3)=64.72. Verify that the replicating strategy is self-financing at steps n=1,n=2 and compute the terminal value of the replicating portfolio at n=3