If an Infinite Number of Intervals Is Applied to the Binomial

question 40

Multiple Choice

If an infinite number of intervals is applied to the binomial option pricing model,then the value of a call is equal to:

• A)the risk-free rate of return.
• B)zero.
• C)the exercise price.
• D)the Black-Scholes model's call value.
• E)the stock price.

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Definitions:

Jean-Jacques Rousseau

An 18th-century philosopher, writer, and composer, known for his influential works on education, political philosophy, and the social contract.

Jean Piaget

A pivotal figure in developmental psychology who introduced the concept that children progress through a series of cognitive developmental stages.

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