Pricing a put with the binomial model is the same procedure as pricing with a call,except that the
A)underlying stock must not pay dividends
B)binomial model cannot account for expiration payoffs
C)value of the underlying must be discounted back to the current time period
D)expiration payoffs reflect the fact that the option is the right to sell the underlying stock
E)none of the above

Question

Quizplus · Accepted Answer

Pricing a put with the binomial model is the same as pricing with a call, except that the expiration payoffs reflect the fact that the option is the right to sell the underlying stock. The other options are not relevant to the pricing of puts with the binomial model.

Pricing a Put with the Binomial Model Is the Same