Which of the Following Variables Are Part of the Black-Scholes

question 107

Multiple Choice

Which of the following variables are part of the Black-Scholes option pricing model?
I. the market price of the underlying stock
II. the volatility of the underlying security
III. the strike price of the option
IV. the risk-free rate of interest
V. the beta of the underlying security
VI. the time remaining before the option expires

• A) I, II, IV and VI only
• B) I, II and III only
• C) I, II, III, IV and VI only
• D) I, II, III, IV, V and VI

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of a business.

Long-Term Liabilities

All of the entity’s obligations that are not classified as current liabilities.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.