In Order for a Binomial Tree to Recombine, the Following $u$

question 22

Multiple Choice

In order for a binomial tree to recombine, the following condition is necessary and sufficient:

• A) The time-step in the tree must remain constant over time.
• B) The up shift factor \(u\) and down shift factor \(d\) must be such that \(u \times d = 1\) .
• C) The up shift factor \(u\) and down shift factor \(d\) must be such that \(u \times d =\) a constant.
• D) The rate of interest must be zero.

---

Definitions:

Amniotic Sac

A fluid-filled sac that surrounds and protects the embryo and fetus in the uterus, providing a buoyant, cushioned environment.

Sperm Donors

Men who provide their semen to be used artificially to inseminate a woman not their sexual partner.

Half Siblings

Children who share only one parent in common, either the same mother or the same father, making them genetically related by 25% under typical circumstances.

Bond

A strong connection, emotional tie or relationship between individuals or groups.