Significance of delta to binomial options pricing model

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Reference no: EM132048716

(Derivatives & Risk Management - BOPM: Binomial Options Pricing Model)

-What is the significance of delta to the BOPM?

-How does it (delta) relate to the concept of a replicating portfolio and why is that important?

(Derivatives & Risk Management - BOPM - Binomial Options Pricing)

-Explain the no-arbitrage approach to valuing options with the Binomial options pricing model.

-Explain why the no-arbitrage condition must exist for a call. In other words, explain what it means for a call to be over-priced or under-priced relative to the BOPM.

-Explain the risk neutral pricing approach to valuing options with the BOPM.

Reference no: EM132048716

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