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Binomial or the Black Scholes?

  1. Feb 23, 2005 #1
    Is this a good problem: Which is a better model for valuing American options: the binomial or the Black Scholes?

    Any feedback is appreciated

    Thanks :smile:

    ps: sorry for the hiatus
     
  2. jcsd
  3. Feb 23, 2005 #2
    Umm...

    What do you mean by 'valuing American options?'
     
  4. Feb 23, 2005 #3
    finding the value of american options before or on the expiry date. Options are a contract where a person can buy (calll) or sell(put) an amount if it will benefit them.
     
  5. Feb 24, 2005 #4
    I'm sorry, I don't know what you mean. I can't help you. Maybe this post belongs in the philosophy section, not homework help.
     
  6. Feb 25, 2005 #5

    HallsofIvy

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    If you don't understand a question, perhaps it is better not to reply at all.

    No, this is not a "philosophy" question, but it is an economics question.

    I'm no expert in the field but googling on 'economics "Black Sholes"' and 'economics binomial', I found this web-site that might help:
    http://www.princeton.edu/~wxiong/465/465_2004.html
     
  7. Feb 25, 2005 #6
    Maybe you should test a plain old straight line too. Depending on which level of statistics you're familiar with.
     
  8. Feb 25, 2005 #7
    Yes, you're fully correct. I should have known better. :rofl:
     
  9. Feb 25, 2005 #8

    HallsofIvy

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    Staff Emeritus
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    That's why I don't reply to MOST posts!
     
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