Which One of These Statements Is True

question 30

Multiple Choice

Which one of these statements is true?

• A)The Black-Scholes model is most applicable to complex situations.
• B)The binomial model is limited to a two-period time sequence.
• C)The binomial model is limited to ten time intervals for any single analysis.
• D)The binomial model is basically equivalent to the Black-Scholes model when there is a single time interval.
• E)The Black-Scholes model is simpler to use,but for complex situations,the binomial model is preferred.

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Definitions:

Par Value

The nominal or face value of a bond, share, or other financial instrument, as stated by the issuer.

Income Statement

The income statement is a financial report that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Treasury Stock-Common

Shares that were once outstanding and have been bought back by the issuing company, reducing the amount of available stock on the open market.

Paid-In Capital

Refers to the amount of capital "paid in" by investors during common or preferred stock issuances, including the excess over the par value.