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

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Definitions:

Cue

A signal or prompt that induces a person to act or respond in a certain way, often used in behavior studies, marketing, and psychological contexts.

Response

The reaction or answer provided following a particular stimulus, inquiry, or situation.

Reinforcement

In the context of behavior, it is the process of encouraging or establishing a pattern of behavior through rewards or consequences.

Stimulus Discrimination

The ability of an individual to differentiate between similar stimuli and respond appropriately to each, often used in marketing to distinguish a brand from its competitors.