8. Binomial option pricing, AD securities and the limiting Black-Scholes model. Be able to explain the Binomial model for t = 0,1,2,3. Be able to explain how it can be used to value a European call option on a stock. Explain the role of the Arrow-Debreu securities and their prices. Also be able to give the intuition about how the Binomial pricing model converges to the Black-Scholes formula. 8. Binomial option pricing, AD securities and the limiting Black-Scholes model. Be able to explain the Binomial model for t = 0,1,2,3. Be able to explain how it can be used to value a European call option on a stock. Explain the role of the Arrow-Debreu securities and their prices. Also be able to give the intuition about how the Binomial pricing model converges to the Black-Scholes formula