The Black-Scholes Option Pricing Model Is Dependent on Which Five

question 75

Multiple Choice

The Black-Scholes option pricing model is dependent on which five parameters?

• A)Stock price,exercise price,risk-free rate,probability of occurrence,and time to expiration
• B)Stock price,risk-free rate,probability of occurrence,time to maturity,and variance of the underlying asset
• C)Stock price,risk-free rate,probability of occurrence,variance of the underlying asset,and exercise price
• D)Stock price,exercise price,risk-free rate,variance of the underlying asset,and time to expiration
• E)Exercise price,probability of occurrence,stock price,variance of the underlying asset,and time to expiration

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product cost calculation, contrasting with absorption costing that also includes fixed costs.

Product Costs

Costs that are incurred to create a product that is intended for sale to customers. This includes direct materials, direct labor, and manufacturing overhead.

Direct Labor

Costs associated with employees who are directly involved in the production of goods or the provision of services, such as wages for factory workers.

Direct Materials

Direct materials are the raw materials that can be directly traced to the production of goods.