In a Binomial Option Model with Three Subintervals, the Probability

question 64

Multiple Choice

In a binomial option model with three subintervals, the probability that the stock price moves up every possible time is ________.

• A) 25%
• B) 15.5%
• C) 12.5%
• D) 8%

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Definitions:

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, often resulting in increased connectivity and interdependence among global economies.

Financialization

The increasing influence of financial markets, financial motives, financial institutions, and financial elites on the economy and economic policy.

Political Systems

The framework of formal legal institutions that constitute a government or a state, determining how power is acquired, communicated, and exercised.

Capital Mobility

The ease with which financial assets or capital can move between countries without barriers, affecting investments and economic policies.