Deep Dive: CFA® Level I Prep 2026

DERIV - Valuing a Derivative Using a One-Period Binomial Model


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Construct a simple up/down binomial tree to price a European call. Learn risk-neutralprobabilities, replicate pay-offs with ∆-hedged portfolios, and generalise theframework for any derivative where pay-off depends on one period of pricemovement.

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Deep Dive: CFA® Level I Prep 2026By Deep Dive Prep