O que é Binomial model?

In the binomial model time runs in $n$ steps of length $\Delta t=T/n$. Over each step the share price is multiplied by $u$ or by $d<u$, and one unit of cash deposited grows to $R=e^{r\Delta t}$ (with a continuous dividend yield $q$, the share’s own growth is compared with $e^{(r-q)\Delta t}$). The model has no arbitrage if and only if $d<e^{(r-q)\Delta t}<u$.