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Basic Question 0 of 17
Which statement is false regarding the one-period binomial model?
B. The hedge ratio is positive for call and put options.
C. The discount rate used in the one-period binomial model is not risk-adjusted.
A. A call option can be synthetically replicated with the underlying and financing.
B. The hedge ratio is positive for call and put options.
C. The discount rate used in the one-period binomial model is not risk-adjusted.
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe and interpret the binomial option valuation model and its component terms;
describe how the value of a European option can be analyzed as the present value of the option's expected payoff at expiration;
CFA® 2025 Level II Curriculum, Volume 5, Module 32.