Which of the Inputs in the Black-Scholes Option Pricing Model

question 8

Multiple Choice

Which of the inputs in the Black-Scholes Option Pricing Model are directly observable

• A)the price of the underlying security.
• B)the risk free rate of interest.
• C)the time to expiration.
• D)the variance of returns of the underlying asset return.
• E)A,B,and C

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Definitions:

Common Shares

Equity securities representing ownership interests in a corporation, entitling holders to vote on corporate matters and receive dividends.

Voting Shares

Shares that give the holder the right to vote on matters of corporate policy and the composition of the board of directors.

Business Combination

A transaction or other event in which an acquirer gains control over one or more businesses, which can include mergers, acquisitions, consolidations, and more.

Transaction Costs

Expenses incurred when buying or selling goods, services, or financial assets, including fees, commissions, and other charges.