Which of the Following Describes How American Options Can Be

question 10

Multiple Choice

Which of the following describes how American options can be valued using a binomial tree?

• A) Check whether early exercise is optimal at all nodes where the option is in-the-money
• B) Check whether early exercise is optimal at the final nodes
• C) Check whether early exercise is optimal at the penultimate nodes and the final nodes
• D) None of the above

---

Definitions:

Erikson

A psychologist known for his theory on the psychosocial development of human beings, which outlines eight stages from infancy to adulthood.

Intimacy Versus Isolation

A stage in Erik Erikson's theory of psychosocial development where adults face the challenge of forming close relationships or risk feeling isolated.

Love

A complex set of emotions, behaviors, and beliefs associated with strong feelings of affection, protectiveness, warmth, and respect for another person.

Developmental Tasks

Specific achievements that individuals are expected to accomplish at certain periods in their life according to societal norms and values.