Use the Fourier method to deduce the von Neumann stability condition for (i) the Jarrow–Rudd binomial scheme (see Problem 6.1), (ii) the Kamrad– Ritchken trinomial scheme, and (iii) the explicit FTCS scheme [see (6.2.2)].

Problem 6.1

Instead of the tree-symmetry condition: u = 1/d [see (6.1.1c)], Jarrow and Rudd (1983) chose the third condition to be p = 1/2. By solving together with (6.1.1a,b), show that