The Two State OPM Is So Named Because

question 51

Multiple Choice

The two state OPM is so named because:

• A) there is only two specific outcomes in the future period.
• B) the probability of price increase equals the probability of a price decrease.
• C) only two interest rates are used.
• D) only two arbitrage positions can be established.

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Definitions:

Compensation

Payment or remuneration awarded to someone in exchange for services rendered or as reparation for loss or injury.

Trespass

The act of unlawfully entering or occupying someone's property without permission.

Conversion

The wrongful taking, using, or retaining possession of personal property that belongs to another.

Personal Property

Items of property that include movable assets as opposed to real property (land and buildings).