Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)A replicating portfolio is a portfolio of other securities that has exactly the same value in one period as the option.
• B)By using the Law of One Price,we are able to solve for the price of the option as long as we know the probabilities of the states in the binomial tree.
• C)The binomial tree contains all the information we currently know: the value of the stock,bond,and call options in each state in one period,as well as the price of the stock and bond today.
• D)The idea that you can replicate the option payoff by dynamically trading in a portfolio of the underlying stock and a risk-free bond was one of the most important contributions of the original Black-Scholes paper.Today,this kind of replication strategy is called a dynamic trading strategy.

Identify the interaction between savers and investors through financial intermediaries.

Understand the differences between dividends and payments made to bondholders.

Know the definitions and types of payments in financial markets, including interest, credit, and capital.

Distinguish between venture capital risks and traditional investment.

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Definitions:

Ethnic Entrepreneur

An individual who creates and manages a business venture, utilizing their ethnic or cultural identity to influence their entrepreneurial activities.

Multiculturalism

A societal approach that recognizes, values, and promotes the cultural differences within a population, encouraging the coexistence of diverse cultural identities.

Racial Groups

Populations of individuals classified or categorized together based on physical characteristics, ancestry, or genetics, often socially constructed.

Ethnic Groups

Collectives of people who identify with each other based on shared cultural traditions, ancestry, language, history, society, nation, or religion.