The Black and Scholes Option Pricing Model Makes an Assumption

question 1

True/False

The Black and Scholes option pricing model makes an assumption that stock prices are normally distributed with a constant mean returns over the period of the option.

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Definitions:

Expectancy Disconfirmation Model

A consumer satisfaction framework that compares actual product or service performance against pre-consumption expectations.

Expectancy Confirmation Model

A psychological theory suggesting that people tend to seek, interpret, favor, and recall information that confirms their pre-existing beliefs and expectations.

Identity Negotiation

A social psychological process where individuals engage in establishing, maintaining, or revising their personal identity or social position within different contexts.

Middle-aged Man

An adult male who is in the middle stage of life, typically considered between the ages of approximately 45 and 65.