A ________ is an option valuation model based on the assumption that stock prices can move to only two values over any short time period.
A) nominal model
B) binomial model
C) time model
D) Black-Scholes model

Question

Quizplus · Accepted Answer

The binomial model is specifically designed to handle situations where the stock price can either go up or down over a short time period, such as a week or a month. It is a commonly used option valuation model in finance. The other choices are not relevant to option valuation.

A ________ Is an Option Valuation Model Based on the Assumption