We implement a Rubinstein-type (1994) implied binomial tree using an Excel spreadsheet, but without using VBA (Visual Basic Application). We demonstrate both the optimization needed to generate ...

David Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning.

Editor’s note: This article uses a simplified example to illustrate how a lattice model works. In the exhibits, the option term is only four years—much shorter than the 10-year life of a typical ...

The binomial tree method, first proposed by Cox, Ross, and Rubinstein [Journal of Financial Economics, 7 (1979), pp. 229-263], is one of the most popular approaches to pricing options. By introducing ...

Learn About an Important Method for Valuing Derivatives and Other Assets Gordon Scott has been an active investor and technical analyst or 20+ years. He is a Chartered Market Technician (CMT). Timothy ...

Decision trees are major components of finance, philosophy, and decision analysis in university classes. Yet, many students ...