Consider the 3-period binomial model with a risk-free asset A with A(0) = 20, interest rate r = 0.07 and a stock S with S(0) = 10, "up" return u = 0.1 and "down" return d so that (1+d)(1+u) = 1.

Consider a European-style arithmetic mean (Asian) call option D on the underlying S with expiration date 3 and strike price 9

1. Compute the stock price process S(0), S(1), S(2), S(3) and the sum-so-far process Y(0), Y(1), Y(2), Y(3); and the risk-neutral probability p

2. Determine the payoff D(3) of the option at expiration for every possible pair of values that the pair (S(3), Y(3)) of random variables takes.

3. Compute the non-discounted price D(2) of the option for all pairs (S(2), Y(2)). No need to compute the replicating investment strategy.

4. Compute the non-discounted price D(1) of the option for all pairs (S(1), Y(1)). No need to compute the replicating investment strategy.

5. Compute the non-discounted price D(0) of the option. No need to compute the replicating investment strategy.