Trinomial Model Revolutionizes Pricing of Exotic Financial Options.
The trinomial asset pricing model is a method used to determine fair prices for different types of options in financial markets. By studying this model, researchers found that it can accurately price standard European options and American put options. They also discovered that the trinomial model can be effective for pricing certain exotic options that are not path dependent. Additionally, the trinomial model converges to the Black-Scholes price faster than the binomial model under specific conditions.