The Following Is NOT an Assumption Underlying the Binomial HJM

question 1

Multiple Choice

The following is NOT an assumption underlying the binomial HJM option pricing model:

• A) no market frictions
• B) no credit risk
• C) competitive and well-functioning markets
• D) no interest rate uncertainty
• E) the forward rates follow a lognormal process

---

Definitions:

Internal Integration

The process of ensuring that various components of an organization, such as departments and teams, work together effectively towards common goals.

Collective Identity

A shared sense of belonging to a group, where members possess a common identity and sense of purpose.

Matching Methods

Techniques used in research or evaluation to pair individuals or groups based on similar characteristics to ensure comparability in a study.

Subcultural Groupings

Divisions within a larger culture, distinguished by their unique values, norms, and lifestyle.