in the binomial model, the difference between the up and down factors best represents the: volatility of the underlying. moneyness of an option. pseudo probability.

in the binomial model, the difference between the up and down factors best represents the: volatility of the underlying. moneyness of an option. pseudo probability.

binomial modelby the difference between the up and down factors.## What is Binomial Model?

binomial modeldescribes the number of survivors, x, in n independent tests. Predetermined tests, statistically independent results for every test, and a constant survival probability throughout the tests are requirements. Based on thebinomial distribution model, we can calculate the probability of observing a specified number of “successes” in the case of repeated processes (for example, in a set of patients).binomial model: