The _____ option pricing model is predicated on the assumption that stock prices can move to only two values over a short period of time.
A) call
B) arbitrage
C) binomial
D) indexed

Question

Quizplus · Accepted Answer

The binomial option pricing model assumes that stock prices can only move to two possible values over a short period of time, making it the best choice for this question. The call option pricing model is focused on valuing call options, the arbitrage option pricing model is based on the concept of arbitrage, and there is no indexed option pricing model.

The _____ Option Pricing Model Is Predicated on the Assumption