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:

Countershafts Rotate

The action of countershafts (secondary shafts) turning, typically in gearboxes, to transmit motion and torque from the input to the output gears.

Output Speed

The rate at which an output shaft rotates, typically measured in RPM (revolutions per minute), indicative of a machine's or component's performance.

Input Speed

The rotational speed at which power or motion enters into a system, such as the speed at which an engine's driveshaft rotates.

Gearset

An assembly of gears designed to transfer mechanical energy from one section of a machine to another.