Which of the Following Statements About the Binomial Option Pricing

question 54

Multiple Choice

Which of the following statements about the binomial option pricing model is not always true?

• A)it can capture the effect of early exercise
• B)it can accommodate a large number of possible stock prices at expiration
• C)it reflects the effects of the stock price,exercise price,risk-free rate,volatility and time to expiration
• D)it gives the price at which the option will trade in the market.
• E)none of the above

---

Definitions:

Judicial Appointment Process

The procedure through which judges are selected and appointed to the bench, which can vary greatly depending on the country's legal framework and may involve nomination by the executive branch and confirmation by the legislative or another body.

Ideological Preferences

The set of beliefs, values, and opinions that shapes an individual's or group's political perspectives and policy choices.

Presidential Preferences

The choices or inclinations of voters regarding presidential candidates in an election.

Judicial Restraint

A philosophy of law where judges play minimal policymaking roles, leaving policy decisions to the legislature and executive branches of government.