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Which of the following most accurately explains how the effective convexity is computed using the binomial model. In order to compute the effective convexity the: A. binomial tree has to be shifted upward and downward by the same amount for all nodes. B. volatility has to be shifted upward and downward and the binomial tree recalculated each time. C. yield curve has to be shifted upward and downward in a parallel manner and the binomial tree recalculated each time. |