Which of the Following Black-Scholes-Merton Model Inputs Are Parameters and Risks

question 13

Multiple Choice

Which of the following Black-Scholes-Merton model inputs are parameters and risks?

• A) Parameters (r,\(\sigma\),K,T),risk (S)
• B) Parameters (r,K,T),risks (S,r)
• C) Parameters (r,K,T),risks (S,\(\sigma\))
• D) Parameters (K,T),risks (S,r,\(\sigma\))
• E) Parameter (K),risks (S,r,\(\sigma\),T)

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Definitions:

Economic Profit

The financial delta observed when a business's total outgoings, including every form of cost, are removed from its total intake.

MR = MC Rule

An economic principle stating that profit maximization occurs when a firm's marginal revenue equals its marginal cost.

Short Run

In economics, a timeframe during which the quantity of at least one production factor cannot be increased.

Long Run

A period in which all factors of production and costs are variable, allowing for full adjustment to changes in market conditions.