binomial model


binomial model
Also known as the binomial option pricing model or the lattice model. A financial option pricing model to estimate the expected value of share-based payments using the variables of dividend yield, exercise period, exercise price, market price, risk free rate of return and share price volatility. The model is used to value executive share options and other long-term incentives. Unlike the Black-Scholes model, it takes into account the fact that executive share options have multiple exercise dates.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Binomial Model —    An option pricing formula suggested by Cox, Ross, Rubinstein and Sharpe and used primarily to calculate the value of American style options.    ► See also American Option, Option …   Financial and business terms

  • Beta-binomial model — In empirical Bayes methods, the Beta binomial model is an analytic model where the likelihood function L(x| heta) is specifed by a binomial distribution:L(x| heta) = operatorname{Bin}(x, heta),::: = {nchoose x} heta^x(1 heta)^{n x},and the… …   Wikipedia

  • binomial option pricing model — See binomial model. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

  • Binomial options pricing model — BOPM redirects here; for other uses see BOPM (disambiguation). In finance, the binomial options pricing model (BOPM) provides a generalizable numerical method for the valuation of options. The binomial model was first proposed by Cox, Ross and… …   Wikipedia

  • Binomial Option Pricing Model — An options valuation method developed by Cox, et al, 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… …   Investment dictionary

  • Model selection — is the task of selecting a statistical model from a set of candidate models, given data. In the simplest cases, a pre existing set of data is considered. However, the task can also involve the design of experiments such that the data collected is …   Wikipedia

  • Binomial regression — In statistics, binomial regression is a technique in which the response (often referred to as Y ) is the result of a series of Bernoulli trials, or a series of one of two possible disjoint outcomes (traditionally denoted success or 1, and failure …   Wikipedia

  • Binomial (disambiguation) — A binomial is a polynomial with two terms.Binomial may also refer to:In mathematics: *Binomial theorem, a theorem about powers of binomials *Binomial coefficient, numbers appearing in the expansions of powers of binomials *Binomial type, a… …   Wikipedia

  • Binomial Tree — A graphical representation of possible intrinsic values that an option may take at different nodes or time periods. The value of the option depends on the underlying stock or bond, and the value of the option at any node depends on the… …   Investment dictionary

  • Binomial option pricing model — An option pricing model in which the underlying asset can take on only two possible, discrete values in the next time period for each value that it can take on in the preceding time period. The New York Times Financial Glossary …   Financial and business terms


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.