Which of the Following Is Not an Assumption Underlying the Black-Scholes

question 17

Multiple Choice

Which of the following is not an assumption underlying the Black-Scholes model?

• A) The rate of interest is constant.
• B) The dividend rate must be less than the interest rate.
• C) Stock volatility is constant.
• D) There are no taxes and transactions costs.

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Definitions:

Interposition

A cue for depth perception where one object overlaps another, which then appears further away.

Interposition

A visual cue that one object is closer than another due to the overlapping of objects, which helps in perceiving depth.

Linear Perspective

A technique in art and photography that creates the illusion of depth and volume on a flat surface by depicting objects smaller as their distance from the observer increases.

Texture Gradient

Texture gradient is a depth cue in visual perception in which the surface texture of an object becomes denser and finer as distance from the viewer increases.