There is an old saying that nature abhors a vacuum. The financial equivalent is markets abhor arbitrage

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There is an old saying that nature abhors a vacuum. The financial equivalent is markets abhor arbitrage opportunities. Explain the central role this principle plays in the binomial model.

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Introduction to Corporate Finance

ISBN: 978-0324657937

2nd edition

Authors: Scott B. Smart, William L Megginson

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Question Posted: May 13, 2015 06:11 AM

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There is an old saying that nature abhors a vacuum. The financial equivalent is markets abhor arbitrage

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The binomial model assumes that if a portfolio of stock and options has a payof...View the full answer

Introduction to Corporate Finance

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