In Order for a Binomial Tree to Recombine,the Following Condition $\mathcal { U }$

question 27

Multiple Choice

In order for a binomial tree to recombine,the following condition is necessary and sufficient:

• A)The time-step in the tree must remain constant over time.
• B)The up shift factor \(\mathcal { U }\)
• And down shift factor
• \(d\)
• Must be such that
• \(u \times d = 1\)
• )
• C)The up shift factor \(\mathcal { U }\)
• And down shift factor
• \(d\)
• Must be such that
• \(u \times d =\)
• A constant.
• D)The rate of interest must be zero.

---

Definitions:

Puritan Leaders

Influential figures within the Puritan movement, which was a significant religious reform movement within the Church of England, aiming to simplify and regulate forms of worship.

English Toleration Act

A 1690 act of Parliament that allowed all English Protestants to worship freely.

Non-Puritan Merchants

Merchants operating in the American colonies who did not adhere to Puritan religious principles, often playing a significant role in the economic life of the colonies.