Which One of the Five Factors Included in the Black-Scholes

question 23

Multiple Choice

Which one of the five factors included in the Black-Scholes option pricing model cannot be directly observed?

• A) Risk-free rate
• B) Strike price
• C) Standard deviation
• D) Stock price
• E) Life of the option

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Definitions:

Service Quality

The perception of how well a service meets or exceeds customer expectations, often evaluated through dimensions like reliability, responsiveness, assurance, empathy, and tangibles.

Reliability

The probability that a machine part or product will function properly for a specified time under stated conditions.

Facilitator

An individual who enables groups and organizations to work more effectively; to collaborate and achieve synergy.