Why are the up and down parameters adjusted

Reference no: EM131326108

Why are the up and down parameters adjusted when the number of periods is extended?

Recall that in introducing the binomial model, we illustrated one- and two-period examples, but we did not adjust the parameters.

What is the difference in these two examples, and why did we adjust the parameters in one case and not in the other?

Reference no: EM131326108

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