Binomial option pricing model

FRM Part 1 Glossary

A discrete-time lattice model that values an option by stepping the underlying up by factor u or down by d and discounting the risk-neutral expected payoff, with risk-neutral probability p = (e^(rΔt) − d) / (u − d); it handles early exercise for American options.

Sign up free — get all 99 FRM Part 1 terms, flashcards & rank tracking →

More FRM Part 1 terms

KomFi Academy — Stop doomscrolling. Get KomFi.

Build your intelligence, anytime, anywhere.

KomFi Academy is a curated training platform with 40,000+ practice questions, 18,000+ flashcards, on-demand video lectures, podcasts, and 4K slide decks across the topics serious professionals study: GMAT, LSAT, MCAT, Investment Banking, Private Equity (LBOs & PE math), Private Credit, Quantitative Finance, Financial Accounting, Asset- Backed Securities, Volume Profile Analysis, Order Flow Trading, Market Microstructure, Volume Spread Analysis, Elliott Wave Theory, Volume-Price Analysis, and Public Offering Frameworks.

What's inside

Topics

View pricing · Read testimonials