Which of the Following Variables in the Black-Scholes-Merton Option Pricing

question 12

Multiple Choice

Which of the following variables in the Black-Scholes-Merton option pricing model is the most difficult to obtain?

• A)the volatility
• B)the risk-free rate
• C)the stock price
• D)the time to expiration
• E)the exercise price

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Definitions:

Equivalent Units Of Production

A concept in cost accounting used to allocate costs to partially completed goods, based on the amount of work done on them.

Equivalent Units Of Production

A calculation used in the production process to equate the amount of work done on partially finished goods to the quantity of completed goods.

Process Costing

A method of costing used to ascertain the cost of a product at each process or stage of manufacture.

Direct Materials

Raw materials that are directly traceable to the production of a specific product or service.