As the Number of Steps in the CRR Binomial Tree

question 10

Multiple Choice

As the number of steps in the CRR binomial tree increases (keeping maturity fixed) , the solution "converges" to a limit result. Which of the following statements characterizes this convergence best?

• A) The solution results in the Black-Scholes formula.
• B) The convergence may be oscillatory for even and odd number of steps in the tree.
• C) The convergence may be monotonic for even and odd number of steps in the tree.
• D) All of the above.

---

Definitions:

Problem-focused Coping Skills

Techniques aimed at addressing and managing the source of stress directly.

Subjective Well-being

An individual's self-reported assessment of their moods, emotions, and satisfaction with life.

Life Expectancy

The average number of years that a person or animal can expect to live, based on statistical data.

Religious Involvement

The participation in or commitment to activities and beliefs associated with a religious faith or community.