When pricing a put with the binomial model,the up and down probabilities are reversed.

Name: When pricing a put with the binomial model,the up and down probabilities are reversed.
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Question

Quizplus · Accepted Answer

When pricing a put with the binomial model, the up and down probabilities are not reversed. The up probability represents the probability of the stock price increasing and the down probability represents the probability of the stock price decreasing. The same probabilities are used for pricing calls and puts.

When Pricing a Put with the Binomial Model,the Up and Down