Final answer:
True, the initial value of a call in a binomial option pricing model can be determined by working backward through the tree to calculate intermediate option values.
Step-by-step explanation:
The statement is true: In a binomial option pricing model, the initial value of the call can be determined by working backward through the tree and calculating for each of the remaining intermediate option values. This method is known as backward induction. Starting from the final possible payoffs at expiration, the value of the call at each preceding node is calculated by considering the possible up and down movements of the underlying asset price, the probability of each movement, the option's strike price, and the risk-free interest rate.
These factors are used to compute the expected payoff at each node until the present value of the call option is determined at the initial node. This approach allows traders and investors to make informed decisions based on the theoretical price of the option.