Which of the Following Is Possible in a Modified Cox,Ross,Rubinstein

question 7

Multiple Choice

Which of the following is possible in a modified Cox,Ross,Rubinstein binomial tree?

• A) The interest rate and volatility can both be functions of time
• B) The interest rate or the volatility can be a function of time, but not both
• C) The interest rate can be a function of time but the volatility cannot
• D) The interest rate and volatility must be constant

---

Definitions:

Paraphrasing

the action of expressing the meaning of something written or spoken using different words, especially to achieve greater clarity.

Listen Effectively

The skill of fully concentrating, understanding, responding, and remembering what is being said during communication.

Acknowledgment Responses

Expressions of recognition or confirmation upon receiving information or communication.

Nods and Smiles

Non-verbal cues often used to express agreement or acknowledgment without verbal communication.