To Price an Option Using the Binomial Pricing Model, It

question 51

True/False

To price an option using the binomial pricing model, it is important that we know the probability that the asset will increase in value.

---

Definitions:

Activity Cost Pools

A grouping of all costs related to a particular activity, used in activity-based costing to allocate costs more accurately.

Activity Rate

A rate used to allocate costs to cost objects based on the activities that drive costs, often used in activity-based costing.

Batch Setup

Batch setup involves the processes and activities necessary to prepare equipment and facilities for the production of a batch of goods.

Human Resource Management

The strategic approach to the effective management of people in an organization to help the business gain a competitive advantage.