Rubinstein (1994)observed That the Performance of the Black-Scholes Model Had

question 40

Multiple Choice

Rubinstein (1994) observed that the performance of the Black-Scholes model had deteriorated in recent years,and he attributed this to

• A)investor fears of another market crash.
• B)higher than normal dividend payouts.
• C)early exercise of American call options.
• D)decreases in transaction costs.
• E)none of the above.

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Definitions:

Stimulus-Response Association

The link established between a specific stimulus and a particular response through conditioning.

Extinction

In behavioral psychology, the gradual weakening and eventual disappearance of a learned response, typically as a result of the withdrawal of reinforcement.

Generalization

A concept in psychology and logic that involves the process of extracting common characteristics from specific examples and applying them to broader contexts.

Operant Conditioning

An educational method where behavior is shaped by either rewarding or penalizing the subject.