Tomorrow’s reading assignment for Finance 4366

The two most important readings for tomorrow’s Finance 4366 quiz and class meeting are Hull’s “Binomial Trees” chapter and my teaching note entitled “Binomial Option Pricing Model (single-period)”. I just updated the latter to explain how risk neutral valuation is implied by the delta hedging and replicating portfolio approaches for pricing options, and tomorrow’s class meeting will be primarily devoted to covering that reading in particular. The other readings are also quite important for the next few Finance 4366 class meetings.

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