Q622
In binomial approach of option pricing model, value of stock is subtracted from call option obligation value to calculate
A.
current value of portfolio
AnswerB.
future value of portfolio
C.
put option value
D.
call option value
Answer: Option A
Solution
Answer: Option A
Solution:
In binomial approach of option pricing model, value of stock is subtracted from call option obligation value to calculate current value of portfolio. It is referred to as mark-to-market and involves multiplying the current share price of the stock by the number of shares owned and summing these values for a total portfolio value.