The world's quickest summary comparison between the two common ways to price an option: Black-Scholes vs. Binomial. For more financial risk videos, visit our website! www.bionicturtle.com.
I wanted to let you know that i've watched most of the videos that you've posted and you've inspired me to also become a teacher. thank you, you're doing a lot of people a great service.
great video ! one question, the Black-Scholes model was developed to value options under specific conditions including for stocks that pay no dividends, so why dividend yield is one of the six inputs?
Thank you! You are correct about the original model, but the model is easily EXTENDED to include dividends (by effectively reducing the stock price input; as the option holder forgoes dividends), the mathematical no-arb solution is not profoundly different as dividends can be parsed out as a known cash flow stream (although more complicated methods are available). Thanks,
