Which of the Following Statements Is Correct

question 18

Multiple Choice

Which of the following statements is correct?

• A) Prior to the Black-Scholes formula, most economists and practitioners anticipated that mathematical formulas could be derived that could accurately price financial securities such as options.
• B) Without the Black-Scholes formula, the job of corporate managers would be very different: many corporations would bear much less risk than they now do.
• C) The most important factors contributing to the huge growth in the types of financial securities that are available today are the techniques that everyone uses to discount them.
• D) It is not an exaggeration to say that the techniques developed by Black, Scholes, and Merton to value options changed the course of financial economics and gave birth to a new profession: financial engineering.

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Definitions:

Direct Approach

A straightforward method of communication where the main point is presented at the beginning.

Granting Claims

The act of acknowledging or conceding a point in an argument while still holding onto one's overall position; often used as a rhetorical strategy.

Requests for Adjustment

Appeals or demands for changes or corrections, often related to products, services, or policies to address a grievance or dissatisfaction.

Personal Responsibility

The act of owning one's actions and their consequences, acknowledging and accepting the role one plays in their own life.