2010 First International Conference on Networking and Computing
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Abstract

Probability theory is used to construct a new type of binomial parameter model, which can avoid negative probability. A detailed proof is given for the generalized binomial model where an extended parameter is added to. The European options and Asian options are priced respectively by numerical examples. The results show that all the binomial models with different parameters have excellent convergence. In addition, the convergence of the generalized binomial model is more stable.
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