Which of the Following Statements Is FALSE

question 33

Multiple Choice

Which of the following statements is FALSE?

• A)If you take the option price quoted in the market as an input and solve for the volatility,you will have an estimate of a stock's volatility known as the implied volatility.
• B)The Black-Scholes formula can be used to price American or European call options on non-dividend-paying stocks.
• C)We need to know the expected return on the stock to calculate the option price in the Black-Scholes Option Pricing Model.
• D)We can use the Black-Scholes formula to compute the price of a European put option on a non-dividend-paying stock by using the put-call parity formula.

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Definitions:

Objective Function

A mathematical function that represents the objective of an optimization problem, usually to be maximized or minimized.

Solver

A software tool or function that finds the optimal solution to a mathematical problem or equation by varying multiple variables within constraints.

Personnel Limitation

Constraints or restrictions related to the number or capabilities of staff available for a project or operation.

Net Present Value

A calculation used to evaluate the profitability of an investment, subtracting the present values of cash outflows from the present values of cash inflows.