Chapter 14. Binomial Trees Study Notes cover the following learning objectives:
* Calculate the value of an American and a European call or put option using a one-step and two-step binomial model.
* Describe how volatility is captured in the binomial model.
* Describe how the value calculated using a binomial model converges as time periods are added.
* Define and calculate delta of a stock option.
* Explain how the binomial model can be altered to price options on stocks with dividends, stock indices, currencies, and futures.
After reviewing the notes, you will be able to apply what you learned with practice questions.
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