Chapter

The Binomial Model

Tomas Björk

in Arbitrage Theory in Continuous Time

Second edition

Published in print March 2004 | ISBN: 9780199271269
Published online October 2005 | e-ISBN: 9780191602849 | DOI: http://dx.doi.org/10.1093/0199271267.003.0002

Series: Oxford Finance Series

The Binomial Model

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This chapter discusses the binomial model — the simplest nontrivial model of a financial market. It begins with the period version of the model, then the model is extended to an arbitrary number of periods. Practice exercises are included.

Keywords: binomial model; bond; price; portfolio; arbitrage; contingent claim

Chapter.  7209 words.  Illustrated.

Subjects: Financial Markets

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