A Branching Tree for the Binomial Model

question 5

Multiple Choice

A branching tree for the binomial model:

• A)Should captures all possible futures paths for the asset.
• B)Has a move down followed by a move up on a subsequent branch to end at the same
• Value as the reverse path.
• C)Has a move down followed by a move up on a subsequent branch to end at a lower
• Value than a move up then a move down.
• D)Both A and C.
• E)Both A and B.

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