Multiple Choice
In a one-period binomial model,assume that the current stock price is $100,and that it will rise to $110 or fall to $90 after one month.If the risk-neutral probability of the stock going up or down is equal,what is the one-month risk-free interest rate in continuously-compounded and annualized terms?
A) 0%
B) 1%
C) 2%
D) 3%
Correct Answer:
Verified
Correct Answer:
Verified
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