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

question 81

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) The price of the underlying security, risk-free rate of interest, and time to expiration

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Definitions:

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Circumstances

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Economic Theory

A set of principles and models that attempts to explain how economies operate and how economic agents interact.