If the Volatility of a Non-Dividend Paying Stock Is 20

question 3

Multiple Choice

If the volatility of a non-dividend paying stock is 20% per annum and a risk-free rate is 5% per annum,which of the following is closest to the Cox,Ross,Rubinstein parameter u for a tree with a three-month time step?

• A) 1.05
• B) 1.07
• C) 1.09
• D) 1.11

---

Definitions:

Cerumen

A technical term for earwax, a natural substance produced in the ear canal that protects ears from dust, foreign particles, and microorganisms.

Hemoccult Test

A diagnostic test used to detect hidden blood in stool, which can be an indicator of various gastrointestinal disorders, such as colorectal cancer.

Peroxide-Based

Referring to products or compounds that contain peroxide, a chemical that acts as a bleaching agent or disinfectant.

Fecal Occult

A medical test used to check stool samples for hidden (occult) blood, which can be an indicator of colorectal cancer or other digestive system conditions.