Suppose That the Stock Price Is Stochastic (Say, Lognormal) with Constant

Multiple Choice

Suppose that the stock price is stochastic (say, lognormal) with constant volatility, and that the interest rate, though not stochastic changes from period to period on the tree. Which of the following statements is valid?

A) The stock process may be represented by a CRR binomial tree and it will be recombining.
B) The stock process may be represented by a JR binomial tree and it will be recombining.
C) Both (a) and (b) .
D) Neither (a) nor (b) .