In a multiperiod binomial model,an arbitrage profit cannot be earned until the option expires.

Name: In a multiperiod binomial model,an arbitrage profit cannot be earned until the option expires.
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Quizplus · Accepted Answer

In a multiperiod binomial model, it is possible to earn an arbitrage profit before the option expires by creating a replicating portfolio that matches the payoff of the option at each node of the tree. This portfolio can then be used to hedge the option and create a riskless arbitrage opportunity.

In a Multiperiod Binomial Model,an Arbitrage Profit Cannot Be Earned