1. TRUE or FALSE (if false, please indicate why the statement is false in the space below the statement. In a binomial tree created to value an option on a stock, the expected return on stock is the risk-free rate. When moving from valuing an option on a non-dividend paying stock to an option on a currency, the risk-free rate is replaced by the excess of the domestic risk-free rate over the foreign risk-free rate when p is calculated. Black-Scholes-Merton assumes that the stock price at a future time is normally distributed