The Risk-Free Rate Used in the Black-Scholes-Merton Model Is The

question 19

Multiple Choice

The risk-free rate used in the Black-Scholes-Merton model is the:

• A) 30-day Treasury bill.
• B) 90-day Treasury bill.
• C) 1-year Treasury bill.
• D) 10-year Treasury bond.
• E) Treasury bill with the same maturity as the option.

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Definitions:

Absolute Worth

The intrinsic value or fundamental importance of something, irrespective of its market value or conditions.

Direct Compensation

Monetary benefits provided to employees in exchange for their labor, including wages, salaries, bonuses, and commissions.

Absolute Pay Levels

The specific amount of monetary compensation given to an employee, not relative to external benchmarks or comparisons.

Relative Levels

Comparative rankings or positions of things or individuals in relation to one another within a particular context or hierarchy.