In the Black-Scholes Option Pricing Formula, N(d₁) Is the Probability

question 4

Multiple Choice

In the Black-Scholes option pricing formula, N(d₁) is the probability that a standardized, normally distributed random variable is:

• A) less than or equal to N(d₂).
• B) less than 1.
• C) equal to 1.
• D) equal to d₁.
• E) less than or equal to d₁.

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Definitions:

Humerus

A long bone in the upper arm that runs from the shoulder to the elbow, connecting with various muscles and joints.

Ulna

One of the two long bones in the forearm, extending from the elbow to the smallest finger.

Metatarsals

Bones forming part of the skeleton of the foot between the toes and the ankle, essential for walking and standing.

Phalanges

The bones of the fingers and toes in human anatomy, crucial for grip, manipulation of objects, and locomotion.