In the binomial options pricing model, it is assumed that the stock price follows a binomial process.

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In the binomial options pricing model, it is assumed that the stock price follows a binomial process.
a. Is this a reasonable description of the actual stock price process?
b. If not, why should one study this model?

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An Introduction to Derivative Securities Financial Markets and Risk Management

ISBN: 978-0393913071

1st edition

Authors: Robert A. Jarrow, Arkadev Chatterjee

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Question Posted: Dec 02, 2015 03:32 AM

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In the binomial options pricing model, it is assumed that the stock price follows a binomial process.

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a No this is not a reasonable description of the stock price process Over any no...View the full answer

An Introduction to Derivative Securities Financial Markets and Risk Management

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