Which of the Following Variables Are Included in the Black-Scholes

question 48

Multiple Choice

Which of the following variables are included in the Black-Scholes call option pricing formula?
I.put premium
II.N(d₁)
III.exercise price
IV.stock price

• A)III and IV only
• B)I, II, and IV only
• C)II, III, and IV only
• D)I, III, and IV only
• E)I, II, III, and IV

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Definitions:

Wheat Future Contract

A legal agreement to buy or sell wheat at a predetermined price at a specified time in the future, used for hedging or speculation.

Spot Price

The current market price at which an asset, like a commodity, currency, or security, can be bought or sold for immediate delivery.

Bushel

A unit of volume that is used in the United States for trading and pricing agricultural commodities like corn, wheat, and soybeans.

S&P 500 Index

A stock market index that measures the stock performance of 500 of the largest companies listed on stock exchanges in the United States.