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After completing this reading, you should be able to:
- Calculate the value of an American and a European call or put option using a one-step and two-step binomial model.
- Describe how volatility is captured in the binomial model.
- Describe how the value calculated using a binomial model converges as time periods are added.
- Explain how the binomial model can be altered to price options on: stocks with dividends, stock indices, currencies, and futures.
- Define and calculate delta of a stock option.

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