Which of the Following Statements Is True

question 11

Multiple Choice

Which of the following statements is true?

• A)The Black Scholes model is the simplest to use and best used for complex situations.
• B)The Binomial model does not handle options with dividend payments prior to expiration date.
• C)The Black Scholes adequately handles the valuation of an American put.
• D)The Binomal model is better for complex situations and is the simplest tool to use.
• E)The Black Scholes model is simpler to use,but for complex situations,the binomial model is the necessary tool.

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Definitions:

Marginal Rates

Rates of tax or charges that apply to the next unit of income or consumption, often increasing with the amount subject to the rate.

MU/P

Marginal utility per unit of price; a calculation used to determine the additional satisfaction gained per unit of currency spent on different goods and services.

Convinced

Being fully persuaded or firmly believing in the truth or existence of something.