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

---

Definitions:

FUTA Taxes

Federal Unemployment Tax Act taxes, which are payroll taxes paid by employers to fund the unemployment account of the federal government.

Unemployment Taxes

Taxes paid by employers to fund unemployment insurance programs, providing financial assistance to unemployed workers.

Medicare Taxes

These are taxes collected to fund the Medicare program, which provides healthcare benefits for eligible seniors and disabled individuals.

Employer Payroll Taxes

Taxes that employers are required to pay on behalf of their employees, such as social security and Medicare taxes.