The Standard Black-Scholes Option Pricing Model Applies To

question 40

Multiple Choice

The standard Black-Scholes option pricing model applies to:

• A)European call options on non-dividend paying stocks.
• B)American call options on non-dividend paying stocks.
• C)European call options on all stocks.
• D)American call options on all stocks.

---

Definitions:

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, representing the decrease in value due to wear and tear over time.

Cost of Goods Sold

The immediate expenses related to the manufacturing of products which a business sells, covering materials and workforce.

Depreciation Expense

An accounting method to allocate the cost of a tangible or physical asset over its useful life.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue; often called the bottom line.