The Black-Scholes-Merton Model Assumes the Underlying Instrument Movement Is Lognormally

question 46

True/False

The Black-Scholes-Merton model assumes the underlying instrument movement is lognormally distributed.

---

Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale.

Average-total-cost Curve

A graphical representation that shows the average total cost of producing each quantity of output.

Marginal-cost Curve

The marginal-cost curve depicts how the cost of producing one additional unit of a good or service varies as production increases.

Economies of Scale

The cost advantage that arises with increased output of a product, as costs are spread over a larger number of goods.