Panicked by derivatives?!

[S2000magician]

@Aether

@S2000magician

My mistake: you may have to calculate an option price from a 1-period or 2-period binomial model, but not from BSM. I was thinking only about BSM.

Sorry.

Are the CFAI rainmakers going to grace us with some assertive generosity, come exam day?

Surely you jest.

@Aether

@S2000magician

My mistake: you may have to calculate an option price from a 1-period or 2-period binomial model, but not from BSM. I was thinking only about BSM.

Sorry.

How did you reach that conclusion?

LOS 50b : Calculate and interpret prices of interest rate options and options on assets using one- and two-period binomial models.

CFA Institute says that you need to know how to calculate the price of options using binomial trees.

LOS 50c : Explain and evaluate the assumptions underlying the Black-Scholes-Merton model.

LOS 50d : Explain how an option price, as represented by the Black-Scholes-Merton model, is affected by a change in value of each of the inputs.

CFA Institute does not say that you need to know how to calculate the price of options using BSM.

[Aether]

@S2000magician

@Aether

@S2000magician

My mistake: you may have to calculate an option price from a 1-period or 2-period binomial model, but not from BSM. I was thinking only about BSM.

Sorry.

Are the CFAI rainmakers going to grace us with some assertive generosity, come exam day?

Surely you jest.

@Aether

@S2000magician

My mistake: you may have to calculate an option price from a 1-period or 2-period binomial model, but not from BSM. I was thinking only about BSM.

Sorry.

How did you reach that conclusion?

LOS 50b : Calculate and interpret prices of interest rate options and options on assets using one- and two-period binomial models.

CFA Institute says that you need to know how to calculate the price of options using binomial trees.

LOS 50c : Explain and evaluate the assumptions underlying the Black-Scholes-Merton model.

LOS 50d : Explain how an option price, as represented by the Black-Scholes-Merton model, is affected by a change in value of each of the inputs.

CFA Institute does not say that you need to know how to calculate the price of options using BSM.

I’d love if you can also paste the LOSs for readings 19-21. See how many “calculates” you find :).