a. In the binomial options pricing model, what assumptions are made about dividends and interest rates? b.
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b. In the binomial stock price tree, what restrictions are needed on the up and down factors, relative to the risk- free rate, to avoid arbitrage? Explain.
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a The binomial option pricing model assumes no dividends are paid over the life of the opt...View the full answer
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Related Book For 
An Introduction to Derivative Securities Financial Markets and Risk Management
ISBN: 978-0393913071
1st edition
Authors: Robert A. Jarrow, Arkadev Chatterjee
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