Black Scholes Model and the Binomial Model Darden

The Black-Scholes Model and the Binomial Model are based on similar assumptions; however, there are some important differences between the two models. Use a specific example to illustrate a difference between the two models. How does the concept of “no arbitrage” affect each model? Prepare a comparative analysis Power Point presentation (minimum 5 slides; maximum 10 slides.)

Use the notes section in PowerPoint to clarify your talking points. The notes section must be formatted according to APA, 6th edition.

Requirements:

*The assumptions and characteristics of the Black Scholes model are clearly and concisely presented. The presentation explains in an excellent manner how the Black Scholes model is utilized to determine the fair prices of real and financial options.

*The assumptions and characteristics of the Binomial model are clearly and concisely presented. The presentation explains in an excellent manner how the Binomial model is utilized to price Employee Stock Options.

*The concept of ‘no arbitrage’ is clearly and concisely presented in an excellent manner for Black Scholes Model and Binomial Model

*A specific real world example is provided, which illustrates clearly and in an excellent manner the differences between the two option models

*Contains at least 3 ADDITIONAL references (beyond what was provided in 1st version) to valid (recent, relevant, high-quality) external sources of information.

*Entire presentation (with additions) is within target range (5-10 slides), not including Title, Overview/Table of Contents and References slides).

*Material is very well organized in a logical fashion and contains all of the key elements (e.g. title page, introduction, appropriate headings, and reference slide).

*The PowerPoint includes a theme/color scheme suitable to topic, and is characterized by a high level of creativity and strong visual appeal. A broad variety of stimulating techniques are used.

*APA format and style is accurately and consistently applied to the entire document (including correct font size and style, spacing, and use of in-text citations, Reference slides). Single spacing is used in speaker notes section.

 
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