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First step in binomial approach of option pricing is to

A. define ending price of stock

B. define beginning price of stock

C. define range of values

D. define domain of values

Answer: Option A

Solution(By Examveda Team)

First step in binomial approach of option pricing is to define ending price of stock. valuation method developed in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option's expiration date.

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