Binomial option pricing model

Definition

An option pricing model in which the underlying asset can assume one of only two possible, discrete values in the next time period for each value that it can take on in the preceding time period.

Investing Essentials

Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University


Term of the Day

Market check
An investigation typically conducted by an investment banking firm, on behalf of a target's Board of Directors (or Special Committee) as part of a process to determine whether a proposed price for... Read More

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!

Create your free portfolio