3
$\begingroup$

Is there any difference between the tree and lattice approach for valuing derivatives? I was under the impression that both are the same.

Improve this question
$\endgroup$

1 Answer 1

Reset to default
1
$\begingroup$

A tree and a lattice are the same thing and are most often used interchangeably. Both a tree and a lattice can either be recombining (an up move followed by a down move is equal in value to a down move followed by an up move) or not recombining. A non-recombining lattice is sometimes considered a bush.

Improve this answer
$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge that you have read and understand our privacy policy and code of conduct.

Not the answer you're looking for? Browse other questions tagged or ask your own question.