Which of the Following Statements About the Binomial Interest Rate

Multiple Choice

Which of the following statements about the binomial interest rate option pricing model is INCORRECT?

A) The binomial model is popular because it is accessible and easy to understand.
B) The binomial model is a useful teaching tool.
C) The binomial model is a versatile model that can price a variety of derivatives.
D) The binomial model illustrates the main tenets of martingale pricing,the key technique that lies at the heart of derivative pricing.
E) The binomial model is more accurate than the Heath-Jarrow-Morton model because it makes a more realistic assumption about the bond price evolution than the HJM model.