4、Which of the following is a condition needed in order for the binomial tree to approach the Black-Scholes model?

A) Stock prices change in a discrete manner.
 
B) Volatility changes stochastically over the life of the option.
 
C) Interest rates change stochastically over the life of the option.
 
D) The time intervals approach zero.

 The  correct  answer is D

As the length of the time intervals approaches zero, the binomial model converges to the continuous-time Black-Scholes model.