Changsheng Dou, Li Wang, Chenxi Zhu
Abstract
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Trinomial tree model is excelled than binomial tree model in precision and calculation from an example. Triple Tree pricing error is much smaller, the result is simpler. By careful analysis, we conclude the real option value under trinomial tree model.
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Trinomial tree model is excelled than binomial tree model in precision and calculation from an example. Triple Tree pricing error is much smaller, the result is simpler. By careful analysis, we conclude the real option value under trinomial tree model.
Key concepts: Trinomial, Trinomial tree, Binomial options pricing model, Binomial (polynomial), Tree (set theory), Mathematics, Value (mathematics), Valuation of options