as well as for an American call option and an American put option. We will rst deal with the simple ap-
proach called binomial options pricing and then discuss the Black–Scholes approach to options pricing
in Chapter 16.
15.1 The Binomial Options Pricing Model for Call Options
As Box 15.1 suggests, the binomial options pricing model can be considered superior to the usual Black–
Scholes model in the valuation of employee stock options. e binomial options pricing model is also
considered to be a better model for valuing interest rate options and currency options. e binomial
options pricing model ...
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