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Options and mathematics: The number of points assigned to the tasks in this part will be based on the amount of details provided in the

Options and mathematics:

The number of points assigned to the tasks in this part will be based on the amount of details provided in the solution. Use your own words and explain each step in the proof, in details. Do not skip calculations!

1. Derive the formula for the self-financing replicating portfolio process of European derivatives in a binomial market.

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