3. In a one-period binomial model, the value of an option is best described as the present value of: A. a probability-weighted average of two possible outcomes. B. a probability-weighted average of a chosen number of possible outcomes. C. one of two possible outcomes based on a chosen size of increase or decrease. 4. An American call option is most likely to be exercised early when: A. the option is deep in the money. B. the underlying asset pays dividends. C. the risk-free interest rate has increased