The Black-Scholes-Merton Option Pricing Model

question 66

Multiple Choice

The Black-Scholes-Merton option pricing model:

• A) Is used to value calls only
• B) Incorporates the stock's price, not the exercise price into its computation
• C) Base the value of an option strictly on that option's intrinsic value
• D) Considers the relationship between the market return and stock return into the option calculation
• E) Recognizes the fact that dividend yields vary from one stock to another

---

Definitions:

Accounting

The information system that identifies, records, and communicates the economic events of an organization to interested users.

Revenue Account

An account that tracks the income generated from normal business operations, such as sales of goods or services.