Options may be valued using a binomial pricing model that assumes the stock price can take on
Question:
Options may be valued using a binomial pricing model that assumes the stock price can take on only two values by the end of any short time period. As the number of such periods increases, the binomial model can approximate more realistic stock price distributions. The Black-Scholes formula may be seen as a limiting case of the binomial option model as the holding period is divided into progressively smaller subperiods. p-69
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
ISE Investments
ISBN: 9781266085963
13th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
Question Posted: