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Completenessƒ 224

The binomial asset pricing in

this section is called

complete because

every derivative can be replicated

by trading in the underlying stock

and the money market.
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In a complete market, every security has a unique price.
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Many markets are incomplete, and prices cannot be determined from no-arbitrage considerations alone. Utility based models are still the only theoretically defensible way of treating such markets.
Derivative securities: Options - Binomial asset pricing model

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