Could someone please explain this to me? When using the binomial model, when is it appropriate to calc the probability of an up or down move ( (1+r-d)/(u-d) ) and when do you just use 50/50?
In the examples I have been doing, it seems like you need to calc when using the binomial trees for options and you assume a 50/50 probability when using binomial trees for fixed income. Is this right? It seems counterintuitive to me as it should be consistent across the board.