Tag: bonds

  • Binomial option pricing model in Excel

    Binomial option pricing model in Excel

    In this lesson, we’ll learn how to set up the binomial option pricing model in Excel. This will allow us to value both call options and put options. We’ll focus on European options that can be exercised only at the expiry of the contract, rather than American options, which can be exercised before expiry. If…

  • Segmented market theory

    Segmented market theory

    After discussing the expectations hypothesis and the liquidity preference theory, we’ll now focus on the segmented market theory as another prominent theory of term structure. At its core, this theory posits that different segments or sectors of the bond market operate independently of each other, each driven by its unique supply and demand dynamics. Unlike…