If the number of binomial periods is increased and u,d and r are not adjusted,the value of a European call will increase.

Question

Quizplus · Accepted Answer

Increasing the number of binomial periods will increase the number of possible price outcomes, leading to a more precise estimation of the option's expected value. As the u, d, and r parameters are held constant, the probability of the stock price rising will increase, causing the call option's value to increase.

If the Number of Binomial Periods Is Increased and U,d