The One-Step Binomial Model Assumes That at the End of the Option

question 64

Multiple Choice

The one-step binomial model assumes that at the end of the option period,the call will have appreciated to S_uT = S₀u or depreciated to S_dT = S₀d.How is u calculated?

• A)1/d
• B)e^(σt^0.5)
• C)both 1/d and e^(σt^0.5)
• D)none of these options

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Definitions:

Antennae

Sensory appendages located on the heads of insects and some other arthropods, used for sensing their environment.

Arthropods

The largest phylum of animals, including insects, spiders, and crustaceans, characterized by an exoskeleton, segmented body, and jointed limbs.

Species

A group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding to produce fertile offspring.

Arachnida

A class of joint-legged invertebrate animals in the arthropod phylum, including spiders, scorpions, ticks, and mites.