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