If the Binomial Model Is Extended to Multiple Periods for a Fixed

question 47

Multiple Choice

If the binomial model is extended to multiple periods for a fixed option life,which of the following adjustments must be made?

• A)the up and down factors must be increased
• B)the risk-free rate must be increased
• C)the up and down factors and the risk-free rate must be decreased
• D)the initial stock price must be proportionately reduced
• E)none of the above

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Definitions:

Files

Digital containers used to store data on computers or other digital devices, recognizable by their names and extensions.

Msconfig

A Microsoft System Configuration utility that helps troubleshoot startup process issues in Windows.

Regedit

Short for Registry Editor, a Windows utility that allows users to view and edit the registry, which stores configuration settings and options on Microsoft Windows operating systems.

WPS

Wi-Fi Protected Setup, a network security standard to create a secure wireless home network.