One Key Difference Between the Black and Scholes (B&S)option Pricing

question 45

Multiple Choice

One key difference between the Black and Scholes (B&S) option pricing model and the binomial model is that the B&S model assumes the ____ is known whereas the binomial model does not.

• A) current market value of the underlying asset
• B) annual risk-free rate
• C) strike price
• D) time until expiration
• E) standard deviation of the underlying asset

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Definitions:

α-D-Glucopyranose

An isomer of glucose that has the pyranose (six-membered ring) form with the hydroxyl group on the first carbon in the alpha configuration.

Sucrose

A disaccharide composed of glucose and fructose, commonly known as table sugar.

Methyl β-D-Glucopyranoside

A chemical compound derived from glucose where a methyl group replaces the hydroxyl group at the anomeric carbon.

Aldaric Acid

A type of sugar acid derived from aldoses by oxidation of both the aldehyde group and the primary alcohol group to carboxylic acids.