Vidyalelo
Commerce · Q637

Financial Management

Graduate and Post Graduate · Commerce · question 637

Q637

Second step in binomial approach of option pricing is to define range of values

A.
at expiration
Answer
B.
at buying date
C.
at exchange closing time
D.
at exchange opening time

Answer: Option A

Solution

Answer: Option A
Solution:
Second step in binomial approach of option pricing is to define range of values at expiration. An expiration date in derivatives is the last day that a derivative, such as options or futures, is valid. On or before this day, investors will have already decided what to do with their expiring position.