Empirical Tests of the Black-Scholes Option Pricing Formula

question 73

Multiple Choice

Empirical tests of the Black-Scholes option pricing formula

• A)shows that binomial option pricing is used widely in practice,especially by international banks in trading OTC options.
• B)works well for pricing American currency options that are at-the-money or out-of-the-money.
• C)does not do well in pricing in-the-money calls and puts.
• D)works well for pricing American currency options that are at-the-money or out-of-the-money,but does not do well in pricing in-the-money calls and puts.

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