[Solved] Research Discussion #4

Assignment Prompt & Instructions

## Research Discussion #4
define the binomial tree option pricing. Provide an example
PROFESSOR'S GUIDANCE FOR THIS WEEK'S RD:
Make  sure that you check the learning goals for this week before you go on  to the next one. Your preparation of the computations for this research  question would benefit greatly from having such information. You may  search about the binomial tree option and how it is priced.
Please ensure that you are adhering to the specific instructions that have been given as a part of this query
With  binomial option price models, the assumptions are that there are two  possible outcomes—hence, the binomial part of the model. With a pricing  model, the two outcomes are a move up, or a move down.2 The  major advantage of a binomial option pricing model is that they’re  mathematically simple. Yet these models can become complex in a  multi-period model.
In  contrast to the Black Sholes Model, which provides a numerical result  based on inputs, the binomial model allows for the calculation of the  asset and the option for multiple periods along with the range of  possible results for each period
The basic method of calculating the binomial option model is to use the same probability each period for success and failure [u](https://www.investopedia.com/articles/optioninvestor/03/090303.asp) ntil the option expires. However, a trader can incorporate different probabilities for each period based on new information obtained as time passes.
Be  sure to proofread carefully (Use Grammarly – the premium version! Make  sure your writing score is more than 90) and cite your sources (APA 7.0  ed).
NOTE:
1. Post your 500-700 word answers by Wednesday 11:55 pm to earn a maximum of 14 points.
2.  Offer at least two 300-400 word comments (replies) to posts from your  peers’ discussions by Sunday 11:55 pm to earn a maximum of 8 points each  (total 16 points)
3. The total grade on each week's RD is 30 points.
**Research Discussion #4**
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