Question: 3. Consider the binomial asset pricing world. Let So - 4, the up factor 1/4. Prove u 2, the down factor d- 1/2 and the

3. Consider the binomial asset pricing world. Let So - 4,

3. Consider the binomial asset pricing world. Let So - 4, the "up factor" 1/4. Prove u 2, the "down factor" d- 1/2 and the risk-free interest rate is Let Xo-So, X,-S1 and define Xn-Sn-Sn-2 for n = 2, 3, or disprove the process X2, X3, is Markovian 3. Consider the binomial asset pricing world. Let So - 4, the "up factor" 1/4. Prove u 2, the "down factor" d- 1/2 and the risk-free interest rate is Let Xo-So, X,-S1 and define Xn-Sn-Sn-2 for n = 2, 3, or disprove the process X2, X3, is Markovian

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