Which of the Following Statements Is False

question 42

Multiple Choice

Which of the following statements is false?

• A) N(d) is the cumulative normal distribution - that is, the probability that a normally distributed variable is greater than d.
• B) Of the five required inputs in the Black-Scholes formula, four are directly observable.
• C) The Black-Scholes formula is derived assuming that the call is a European option.
• D) The Black-Scholes Option Pricing Model can be derived from the Binomial Option Pricing Model by making the length of each period, and the movement of the stock price per period, shrink to zero and letting the number of periods grow infinitely large.

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Definitions:

Third-Party Payments

Transactions where a third party pays for the goods or services being offered to a consumer, common in insurance and healthcare sectors.

Subsidies

Financial support extended by the government to an economic sector (or market) aiming to promote an economic and social policy.

Economic Theory

A set of principles and frameworks for understanding how economies function, including the production, distribution, and consumption of goods and services.

Third Parties

Individuals or entities that are not directly involved in a transaction or agreement but may be affected by it or have interests in its outcome.