When using the binomial model, you can't make decisions about investment using only the risk-neutral measure because O all investments have the same expected rate of return in the risk-neutral measure. O all investors are risk-neutral in the risk-neutral measure. O all information about risk was removed from the model by switching from physical to risk-neutral measure. O there are undue assumptions made in the construction of the risk-neutral measure. O None of the other responses.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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When using the binomial model, you can't make decisions about investment using only the risk-neutral
measure because
O all investments have the same expected rate of return in the risk-neutral measure.
all investors are risk-neutral in the risk-neutral measure.
all information about risk was removed from the model by switching from physical to risk-neutral measure.
there are undue assumptions made in the construction of the risk-neutral measure.
None of the other responses.
Transcribed Image Text:When using the binomial model, you can't make decisions about investment using only the risk-neutral measure because O all investments have the same expected rate of return in the risk-neutral measure. all investors are risk-neutral in the risk-neutral measure. all information about risk was removed from the model by switching from physical to risk-neutral measure. there are undue assumptions made in the construction of the risk-neutral measure. None of the other responses.
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