CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

According to the binomial model, the value of a put option is NOT determined by ______.
A. the volatility of the underlying
B. the probabilities of the up and down moves
C. the risk-free rate
Explanation: The actual probabilities of the up and down moves are irrelevant to pricing options. The risk-free rate and underlying volatility are highly relevant.

User Contributed Comments 1

User Comment
nmech1984 I presume synthetic probabilities concern.
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