What is the recommended way of making interest rates a function of time in a Cox, Ross, Rubinstein tree?
A. Make u a function of time
B. Make p a function of time
C. Make u and p a function of time
D. Make the lengths of the time steps unequal
B
u does not depend on interest rates but p does. The impact of the interest rate being a function of time is therefore to make p a function of time.
You might also like to view...
The term "False Starts" refers to which of the following?
A) job candidates who are from competing firms B) job candidates who fail employee selection tests C) employees who fail to meet performance goals D) employees who quit within 120 days of being hired
Testamentary capacity refers to:
a. the age of the testator. b. the same capacity as required to contract. c. the ability to understand the nature and extent of one's property, to appreciate the natural objects of one's bounty, and the ability to formulate an orderly plan of disposition. d. the influence of others over the testator.