When We Move from Assuming No Dividends to Assuming a Constant

question 18

Multiple Choice

When we move from assuming no dividends to assuming a constant dividend yield,which of the following is true for a Cox,Ross,Rubinstein tree?

• A) The parameters u and p change
• B) p changes but u does not
• C) u changes but p does not
• D) Neither p nor u changes

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Definitions:

DSM

The Diagnostic and Statistical Manual of Mental Disorders, a standardized classification of mental disorders used by mental health professionals.

Discrete Categories

Distinct and separate groups or classifications without overlap.

Reduction

The process of making something smaller or less in amount, size, or importance.

Emotional Outbursts

Sudden, intense expressions of emotion that may not be appropriate to the situation.