The Black-Scholes Model Differs from the Binomial in That

question 12

Multiple Choice

The Black-Scholes model differs from the binomial in that

• A)The mathematics it requires is much simpler.
• B)It provides closed-form solutions for option prices,so can price European options faster than the binomial model.
• C)It can handle stochastic interest rates more efficiently than the binomial.
• D)It was developed after the binomial model and is therefore more current.

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Definitions:

Electrical Properties

Characteristics of materials or systems that define their behavior in the presence of electric fields, including conductivity, resistivity, and dielectric constant.

Ion Concentration

The measure of the number of ions in a particular volume of solution, impacting electrical conductivity, pH, and various biological processes.

Plasma Membrane

A selective barrier that surrounds a cell, controlling the movement of substances in and out of the cell.

Sliding Filament Model

A theory explaining the mechanism of muscle contraction through the sliding of actin (thin) filaments over myosin (thick) filaments, shortening the sarcomere.