Decision trees are essential tools in finance, helping analysts and investors visualize choices, risks, and potential outcomes. They are widely used in option pricing, real option analysis, and ...

A binomial tree allows investors to assess when and if an option will be exercised. An option has a higher probability of being exercised if the option has a positive value. Special Considerations ...

The optimal sampling probability is determined by the maximum geometric-mean values, and we construct optimal decision tree models based on the optimal balanced samples with the optimal sampling ...