Which of the Following Is Not an Assumption Underlying the Black-Scholes

question 43

Multiple Choice

Which of the following is not an assumption underlying the Black-Scholes option-pricing model?

• A) The risk-free rate is known and constant over the life of the option.
• B) The probability distribution of stock prices is lognormal.
• C) The world is risk-neutral.
• D) The variability of a stock's return is constant.
• E) There are no transaction costs involved in trading options.

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A medical doctor specializing in the diagnosis and treatment of eye diseases and conditions.

Optometrist

A healthcare professional who provides primary vision care, diagnoses, treats, and manages changes in vision.