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 of the time step in years
• C) The tree recombines
• D) All of the above

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Definitions:

Repatriation

The process of returning an individual to their country of origin or citizenship, often used in the context of employees returning from international assignments.

Immigration

The action of coming to live permanently in a foreign country, often for reasons such as employment, better quality of life, or political asylum.

Deportation

The official removal of an individual from a country in which they are not a citizen typically due to the violation of immigration or criminal laws.

Indirect Effects

Consequences of a business or economic action that are not immediate or direct but occur as a secondary effect.