The fundamental formula for binomial pricing is identical between stock option and bond option. However, how to treat the dividend and coupon payments are different.Explain the difference between the two.
As I understood your question you need a good book on pricing derivatives. Try this:Hull , John – Options, Futures and Other Derivative Securities (5nd Ed.)Since direct links are not welcome here, you should open http://www.rapidshared.org -> choose e-books directory -> search for ‘derivatives’ -> get the direct link and spent couple of minutes reading the demanded chapters.
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