Ask the class to prove that option pricing is consistent with standard discounted cash flow calculations.Propose that students form groups and develop two binomial trees for the same set of data.One tree should use real probabilities as defined in chapter 11 and the other as defined in chapter 10.

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The Answer of Ask the class to prove that option pricing is consistent with standard discounted cash flow calculations.Propose that students form groups and develop two binomial trees for the same set of data.One tree should use real probabilities as defined in chapter 11 and the other as defined in chapter 10.

Ask the Class to Prove That Option Pricing Is Consistent