In the Black-Scholes Model, If an Option Is Not Likely

question 9

Multiple Choice

In the Black-Scholes model, if an option is not likely to be exercised, both N(d₁) and N(d₂) will be close to ________. If the option is definitely likely to be exercised, N(d₁) and N(d₂) will be close to ________.

• A) 1; 0
• B) 0; 1
• C) −1; 1
• D) 1; −1

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Definitions:

Risky Behavior

Risky behavior encompasses actions that potentially expose individuals to harm or significant risk of negative consequences.

Adolescents

Individuals in the transitional stage of human development between childhood and adulthood, typically ranging from ages 13 to 19, experiencing significant physical, emotional, and social changes.

Electrical Brain Waves

Oscillating electrical voltages in the brain, measurable by EEG, that reflect different states of brain activity.

Brain Death

A diagnosis of death based on the cessation of all signs of brain activity, as measured by electrical brain waves.