If the Simplico mine is solved with all parameters remaining the same except that (u=1.2) is changed

Question:

If the Simplico mine is solved with all parameters remaining the same except that \(u=1.2\) is changed to \(u=1.3\), the value of the lease remains unchanged to within three decimal places. Indeed, quite wide variations in \(u\) and \(d\) have almost no influence on the lease price. Give an intuitive explanation for this.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Investment Science

ISBN: 9780199740086

2nd Edition

Authors: David G. Luenberger

Question Posted: