Binary-tree Model Based on Bayesian
Chun Sheng Luo · Journal of Shanghai Institute of Technology · 2009
The reasonable price of derivative securities in the options is a problem which haunts investors.In the model it is difficult to determine the interval cycle of rate fluctuations,which will be faced when you want to price.Each related company has its own unique way to determine the time intervals,generally the information of post-time and the information of similar shares or related securities is ignored,so that we can not make full use of relevant information and figure out more accurate on the options for pricing.Through the use of Bayesian theory and Binary-tree model and integrating previous experience and people's prior knowledge,options are priced.That is why we are here to explore the Bayesian-based Binary-tree option pricing model,and its shares on the assumption that the rate of return subject to the normal distribution.