True/False Please mark whether each of the following statements is true or false. (a) Consider a stock whose required re

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True/False
Please mark whether each of the following statements is true or
false.
(a) Consider a stock whose required return is higher than the
risk-free return. Then, in a binomial tree, the real probability of
an increase in the price is higher than the risk-neutral
probability of the increase. (TRUE / FALSE )
(b) In the risk-neutral valuation, we assume that investors are
risk-neutral. Thus, the option price from the risk-neutral
valuation should be different from the price from the DCF approach
where we acknowledge investors’ risk-aversion. ( TRUE / FALSE )
(c) In the risk-neutral valuation, we penalize risk by changing
the probability. ( TRUE / FALSE )