Which of the following is true of the multi-period binomial valuation?

Question

Quizplus · Accepted Answer

The multi-period binomial valuation method is a more sophisticated version of the basic binomial valuation method, allowing for multiple periods and the possibility of more than two outcomes at each period. Its empirical accuracy increases as time is divided into finer binomial periods. However, it still relies on the use of probabilities for valuations. While the method does not necessarily require the use of computers, complex valuations may benefit from the use of computational tools.

Which of the Following Is True of the Multi-Period Binomial