Here’s a simplified version of exercise 10.

Consider an alternative parameterization of the binomial:

Construct binomial European call and put option pricing functions in VBA for this parameterization and show that they also converge to the Black-Scholes formula. (The message here is that the parameterization of the binomial Up and Down is not unique.)

Transcribed Image Text:

Up -Tin R- R-Down R(Up-Down) Down=- To R