In the Black-Scholes Option Pricing Model,investors Are Assumed to Be

question 14

Multiple Choice

In the Black-Scholes option pricing model,investors are assumed to be not only rational but also able to do Ito calculus.This model,with its unrealistic assumptions,

• A) is valuable only as an abstract curiosity.
• B) cannot be robust.
• C) still leads to accurate predictions.
• D) is rejected by most economists.