Which One of the Following Statements Is Correct Concerning the Black-Scholes

question 8

Multiple Choice

Which one of the following statements is correct concerning the Black-Scholes option pricing model?

• A)The model assumes a stock pays a constant annual dividend.
• B)The model expresses time in terms of years.
• C)The model is based on American-style options.
• D)The model assumes that the current stock price is equal to the strike price.
• E)The model assumes the put is in the money.

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Definitions:

Census

An official count or survey of a population, typically recording various details of individuals, such as age, sex, occupation, and nationality.

Representative Sample

A representative sample is a subset of a population that accurately reflects the members of the entire population, used in statistical analysis to make inferences about the population.

Experimental Method

A research methodology that involves manipulating variables to test hypotheses and observe effects.

Spurious Relationship

A statistical association between two variables that appears to be causally linked but is actually due to a third variable or a coincidence.