In What Instances Is the Binomial Option Pricing Model Superior

question 38

Essay

In what instances is the binomial option pricing model superior to the Black-Scholes option pricing model?

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Definitions:

Aneroid Sphygmomanometer

A type of blood pressure monitor that uses a gauge without liquid (aneroid) to measure blood pressure.

Axillary Thermometer

A thermometer designed for measuring body temperature by placing it in the armpit (axillary area).

Systolic

Pertaining to the phase of the heartbeat when the heart muscle contracts and pumps blood from the chambers into the arteries.

Diastolic

Refers to the phase of the heartbeat when the heart muscle relaxes and allows the chambers to fill with blood, specifically noted as the bottom number in blood pressure readings.