Which of the Following Statements Is INCORRECT

question 7

Multiple Choice

Which of the following statements is INCORRECT?

• A) The method of computing a stock's present value by its expected payoff using the actual probabilities is known as martingale pricing.
• B) A martingale is a stochastic process X(t)whose time t value equals its expected value X(T)at some later date T.
• C) Martingales are associated with "fair gambles" because what you have today is what you expect to have tomorrow.
• D) In finance,martingales are used to price derivatives in a framework that allows no arbitrage opportunities.
• E) The probabilities we use in martingale pricing are pseudo-probabilities and not the actual probabilities.