The Black and Scholes Option Pricing Model Makes an Assumption

question 11

True/False

The Black and Scholes option pricing model makes an assumption that stock prices are lognormally distributed with a constant variance for the underlying returns.

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Definitions:

Theory of Planned Behavior

A psychological theory that predicts an individual's intention to engage in a behavior at a specific time and place, considering attitudes, subjective norms, and perceived behavioral control.

Self-Efficacy

An individual’s belief in their capacity to execute behaviors necessary to produce specific performance attainments.

Control Action

Measures or steps taken to manage or regulate a process or system to achieve desired outcomes or maintain stability.

Predictive Ability

describes the capability to accurately forecast future events or outcomes based on current or past data.