Repeat Problem 14.3, except construct a three -period binomial tree. Assume that Asian options are based on
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Repeat Problem 14.3, except construct a three-period binomial tree. Assume that Asian options are based on averaging the prices every 4 months.
a. What are the possible geometric and arithmetic averages after 1 year?
b. What is the price of an Asian arithmetic average price call?
c. What is the price of an Asian geometric average price call?
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