Which of the Following Is Assumed by the Black-Scholes-Merton Model

question 20

Multiple Choice

Which of the following is assumed by the Black-Scholes-Merton model?

• A) The return from the stock in a short period of time is lognormal
• B) The stock price at a future time is lognormal
• C) The stock price at a future time is normal
• D) None of the above

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Definitions:

Typological Approach

A method in psychology that categorizes individuals into specific types based on particular traits or behaviors.

Positivity

The practice or tendency to maintain a positive attitude, focusing on the good aspects of any situation.

Absolutely

Used to express complete and total agreement or to confirm that something is unquestionably true or correct.

Smart

Possessing intelligence and quickness of understanding, often used to describe someone who is intellectually able or clever.