Binomial Pricing

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August 31, 2024 3 min read Definitions
Binomial Pricing: Valuation Method Based on Binomial Distributions
Finance Investments Binomial Pricing Option Valuation Finance Investments Financial Modeling
Binomial pricing is a valuation method used to price options, relying on the assumption that asset prices follow a binomial distribution. This method involves constructing a portfolio with the underlying asset and risk-free asset to match the option's pay-offs and determine its price by avoiding arbitrage possibilities.
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