Which of the Following Statements About the Black-Scholes-Merton Model Is

question 7

Multiple Choice

Which of the following statements about the Black-Scholes-Merton model is not true?

• A)decreasing the volatility lowers the call price
• B)the expected stock price plays a role in the model
• C)the risk-free rate is continuously compounded
• D)the model is consistent with put-call parity
• E)none of the above

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Definitions:

Day-To-Day Activities

The regular, everyday tasks or operations that are essential to the functioning of a business or individual.

Unlimited Liability

A legal structure in which the business owners are personally responsible for all of the company's debts and obligations.

General Partnership

A partnership that involves a complete sharing in both the management and the liability of the business.