Which of the Following Describes the Way That the Parameters

question 14

Multiple Choice

Which of the following describes the way that the parameters in a binomial tree are chosen?

• A) The expected return during each time step is the risk-free rate
• B) The standard deviation of the return in each time step is, for small time steps, almost exactly equal to the volatility per annum times the square root of the length on the time step in years
• C) The tree recombines
• D) All of the above

---

Definitions:

LANs

Abbreviation for Local Area Networks, computer networks that interconnect computers within a limited area such as a home, school, computer laboratory, or office building.

Productivity

The ratio between the inputs to a process and the outputs from that process.

On-Premise System

A type of computing infrastructure where software applications are installed and run on the hardware located within the premises of the organization using the software, rather than at a remote facility such as a server farm or cloud.

Cloud Computing Costs

refer to the expenses associated with using cloud computing services, which can include costs for data storage, processing, and bandwidth.