What Are the Major Variables in the Black-Scholes Option Pricing

question 39

Essay

What are the major variables in the Black-Scholes option pricing model and in what direction do they influence the price of call options?

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Definitions:

Continued Losses

Ongoing financial deficits where expenses exceed revenues over a period of time.

Distribution of Income

The way in which a nation’s total income is spread among its population, affecting economic stability and growth.

Consumer Sovereignty

The theory that consumer preferences determine the production of goods and services in an economy.

Willingness to Pay

The maximum amount an individual is ready to spend for a good or service, reflecting its perceived value.