Page 44 - FINAL CFA I SLIDES JUNE 2019 DAY 3
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LOS 10.g: Construct a binomial tree to describe stock Session Unit 3:
price movement, p.221
10. Common Probability Distributions
The probability that the stock price is down (<50) after two periods is simply the probability of two down
movements, (1 – 0.7)2 = 9%.
