Rubinstein (1994) Observed That the Performance of the Black-Scholes Model

question 85

Multiple Choice

Rubinstein (1994) observed that the performance of the Black-Scholes model had deteriorated in recent years, and he attributed this to

• A)investor fears of another market crash.
• B)higher-than-normal dividend payouts.
• C)early exercise of American call options.
• D)decreases in transaction costs.

---

Definitions:

HBr

Hydrobromic acid, a strong acid formed by dissolving hydrogen bromide in water, used in organic synthesis and as a catalyst.

Addition

A chemical reaction where two or more substances combine to form a single product, often involving the breaking of double or triple bonds.

Anhydrous HCl

Hydrogen chloride gas or any form of hydrochloric acid that does not contain water.

1,3-Pentadiene

An organic compound with a chain of five carbon atoms, containing two double bonds located at positions 1 and 3.