Which of the Following Statements Is FALSE

question 5

Multiple Choice

Which of the following statements is FALSE?

• A)The techniques of the binomial option pricing model are specific to European call and put options.
• B)We can summarize the payoffs for the Binomial Option Pricing Model in a binomial tree-a timeline with two branches at every date that represent the possible events that could happen at those times.
• C)We define the state in which the stock price goes up as the up state and the state in which the stock price goes down as the down state.
• D)When using the Binomial Option Pricing Model,by the Law of One Price,the price of the option today must equal the current market value of the replicating portfolio.

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Definitions:

Controlling Account

An account in the general ledger that summarizes the detail contained in a subsidiary ledger.

Cost Ledger

A ledger that keeps track of the costs of production, including direct materials, direct labor, and manufacturing overhead.

Jobs Shipped

The completed work projects or orders that have been sent to the customer.

Finished Goods

Products that have completed the manufacturing process and are ready to be sold.