What is the relation between the binomial option pricing model and the Black-Scholes formula? There is...
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What is the relation between the binomial option pricing model and the Black-Scholes formula? There is no relation (other than that they both price options), these are two different models The Black Scholes formula is the same as a binomial model with a very large number of up-down periods (and very small delta t) The Black Scholes formula is the same as a binomial model with a very small number of up-down periods (and very large delta t) The Black Scholes formula and the binomial model are the same for at-the-money options What is the relation between the binomial option pricing model and the Black-Scholes formula? There is no relation (other than that they both price options), these are two different models The Black Scholes formula is the same as a binomial model with a very large number of up-down periods (and very small delta t) The Black Scholes formula is the same as a binomial model with a very small number of up-down periods (and very large delta t) The Black Scholes formula and the binomial model are the same for at-the-money options
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Related Book For
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders, Marcia Cornett
Posted Date:
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