1) Compare the variables in the Binomial model with those in the black-schooled model. Discuss which ones differ between the two models. Explain how this variable is presented in the each of these models, and how they are related.

2) identify and explain two anomalies in the market which the black-s holes model cannot explain.

3) identify two factors which are not part of the black-scholars model which may account for the situation discussed in part b.

Answer rating: 100% (QA)

1 Comparison of Variables in Binomial and BlackScholes Models Underlying Asset Price Both models consider the current price of the underlying asset Time to Maturity Both models incorporate the time re... View the full answer