Q668
Pricing model approach in which it is assumed that stock price can have one of two values of stock is classified as
A.
valued approach
B.
marketability approach
C.
stock approach
D.
binomial approach
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Pricing model approach in which it is assumed that stock price can have one of two values of stock is classified as binomial approach. The binomial option pricing model is an options valuation method developed in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option's expiration date.