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(Model is a 3 period binomial model ) We consider the 3-period model seen in class with the parameters So = 4, y = 2,

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(Model is a 3 period binomial model )

We consider the 3-period model seen in class with the parameters So = 4, y = 2, d = 1/2, r = 1/5, K = 2. The price of the underlying asset is denoted by Sn for n = 0, 1, 2, 3. Give also the hedging strategy Ao at time 0

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