Which of the Following Statements Is FALSE

question 20

Multiple Choice

Which of the following statements is FALSE?

• A)N(d)is the cumulative normal distribution-that is,the probability that a normally distributed variable is greater than d.
• B)Of the five required inputs in the Black-Scholes formula,four are directly observable.
• C)The Black-Scholes formula is derived assuming that the call is a European option.
• D)The Black-Scholes Option Pricing Model can be derived from the Binomial Option Pricing Model by making the length of each period,and the movement of the stock price per period,shrink to zero and letting the number of periods grow infinitely large.

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Definitions:

Long-run Equilibrium

A state in which supply equals demand, and all firms in the market are operating at an efficient scale with no incentive to enter or exit.

Minimum ATC

The point at which a firm's average total cost is at its lowest, typically considered in the context of the long-run average cost curve.

Purely Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and a product that is homogeneous across suppliers.

Short Run

A period of time during which at least one input, like equipment or labor, is fixed while others can be varied to change output levels.