The Black-Scholes option pricing model (OPM) was developed in 1973. The creation of the Black-Scholes OPM played a significant role in the rapid growth of options trading.
Under the assumptions used by Fischer Black and Myron Scholes to derive the Black-Scholes model, if the option price is the price found using the Black-Scholes model, arbitrage opportunities will exist.
According to the Black—Scholes Option Pricing Model, if the current stock price, P, increases, the value of the call option will
Merry Melon Fruit Company has a current stock price of $20.00. A call option on this stock has an exercise price of $20.00 and 0.36 year to maturity. The variance of the stock price is 0.04, and the risk-free rate is 5%. You calculate d1 to be 0.21 and N(0.21) to be 0.5832. Therefore, d_2 will be 0.09 and N(0.09) will be 0.5359. Using the Black- Scholes option Pricing Model, what is the value of the option?
a. $1.137
b. $1.251
c. $1.308
d. $0.966
Answers: 2
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Which of the following would not generally be a motive for a firm to hold inventories? a. to decouple or separate parts of the production process b. to provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to minimize holding costs e. all of the above are functions of inventory.
Answers: 1
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Which of the following best describes the advantage of living in a suburban area? a. suburbs give people access to city jobs along with more living space. b. suburbs give people easy access to cultural attractions and high-paying jobs. c. suburbs have the widest availability of low-cost housing of any living area. d. suburbs have the lowest population density of any living area.
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The Black-Scholes option pricing model (OPM) was developed in 1973. The creation of the Black-Schole...
Mathematics, 26.02.2020 02:24
Mathematics, 26.02.2020 02:24
Mathematics, 26.02.2020 02:24
Mathematics, 26.02.2020 02:24