Hull_OFOD9e_MultipleChoice_Questions_Only_Ch21

# Hull_OFOD9e_MultipleChoice_Questions_Only_Ch21 - Hull...

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Hull: Options, Futures, and other Derivatives, Ninth Edition Chapter 21: Basic Numerical Procedures Multiple Choice Test Bank: Questions 1. How many nodes are there at the end of a Cox-Ross-Rubinstein five-step binomial tree? A. 4 B. 5 C. 6 D. 7 2. Which of the following cannot be estimated from a single binomial tree? 3. Which of the following is true for u in a Cox-Ross-Rubinstein binomial tree? 4. How many different paths are there through a Cox-Ross-Rubinstein tree with four-steps? 5. When we move from assuming no dividends to assuming a constant dividend yield, which of the following is true for a Cox, Ross, Rubinstein tree? A. The parameters u and p change B. p changes but u does not C. u changes but p does not D. Neither p nor u changes 6. When the stock price is 20 and the present value of dividends is 2, which of the following is the recommended way of constructing a tree?

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