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:

Sigma Complex

An intermediate stage in certain chemical reactions characterized by a complex in which the central metal atom is bonded to ligands through sigma bonds.

HNO3

Nitric acid, a highly corrosive and toxic strong mineral acid used in the production of fertilizers, explosives, and in the pickling of metals.

P-nitroanisole

An organic compound consisting of an anisole group where a nitro group is attached to the para position of the anisole ring.

Nitro Group

A nitro group is a functional group consisting of a nitrogen atom bonded to two oxygen atoms (−NO2), often contributing to the reactivity of a molecule.