When puts are priced with the binomial model,which of the following is true?
A)the puts must be American
B)the puts cannot be properly hedged
C)the puts will violate put-call parity
D)the hedge ratio is one throughout the tree
E)none of the above

Question

Quizplus · Accepted Answer

The binomial model can be used to price both American and European puts, allows for proper hedging, does not inherently violate put-call parity, and the hedge ratio varies throughout the tree. Therefore, none of the given statements are true about puts priced with the binomial model.

When Puts Are Priced with the Binomial Model,which of the Following