Question: For a BAPM with N = 3, r = 0:1, u = 1:5, d = 0:9, and S0 = 7:43, determine the arbitrage free price

For a BAPM with N = 3, r = 0:1, u = 1:5, d = 0:9, and S0 = 7:43, determine the arbitrage free price of an Asian call option (VN = (Savg SN )+ with Savg being the arithmetic average, and payoff only at maturity) and its replicating strategy.

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