Which of the following describes how American options can be valued using a binomial tree?
A. Check whether early exercise is optimal at all nodes where the option is in-the-money
B. Check whether early exercise is optimal at the final nodes
C. Check whether early exercise is optimal at the penultimate nodes and the final nodes
D. None of the above
A
For an American option we must check whether exercising is better than not exercising at each node where the option is in the money. (It is clearly not worth exercising when the option is out of the money)
You might also like to view...
An integrative negotiation problem should be defined as a solution process rather than as a specific goal to be attained.
Answer the following statement true (T) or false (F)
Which sentence is correctly punctuated?
A) ?Standardized tests are used by most states to measure student success, however many states are adopting more culturally diverse tests. B) ?Amanda was selected as employee of the month thus, she received a reserved parking space. C) Many Americans take advantage of low financing rates when purchasing new, more energy-efficient automobiles; nevertheless, many Americans cannot afford a new vehicle.
________ intervention involves attracting good people, setting goals, and appraising and rewarding performance.
A. Technostructural B. Strategic C. Human resources management D. Marketing E. Tactical
Sales promotion methods include all of the following except:
A. premiums. B. coupons. C. rebates. D. news releases. E. frequent-user incentives.