Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)A replicating portfolio is a portfolio of other securities that has exactly the same value in one period as the option.
• B)By using the Law of One Price,we are able to solve for the price of the option as long as we know the probabilities of the states in the binomial tree.
• C)The binomial tree contains all the information we currently know: the value of the stock,bond,and call options in each state in one period,as well as the price of the stock and bond today.
• D)The idea that you can replicate the option payoff by dynamically trading in a portfolio of the underlying stock and a risk-free bond was one of the most important contributions of the original Black-Scholes paper.Today,this kind of replication strategy is called a dynamic trading strategy.

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Psychological support or therapy services provided within an individual's residence, aimed at increasing accessibility and comfort.

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