In many of the resources I've found in regards to the Black-Scholes Formula, it uses the natural logarithm (ln). However, in the textbook that I am using (by Sheldon Ross), it uses the regular logarithm (log). Everything else is the same, except for that. Needless to say, a different answer results depending on which logarithm form is used. For example, in one problem I've done, if I use the natural logarithm I get a cost of $1.82, but if I use the regular logarithm, I get a cost of $-1.37. Is there a reason why different logarithms are used? If so, what version of the formula should I be using? It seems to matter in the results.
In many of the resources I've found in regards to the Black-Scholes Formula, it uses the natural logarithm (ln). However, in the textbook that I am using (by Sheldon Ross), it uses the regular logarithm (log). Everything else is the same, except for that. Needless to say, a different answer results depending on which logarithm form is used. For example, in one problem I've done, if I use the natural logarithm I get a cost of $1.82, but if I use the regular logarithm, I get a cost of $-1.37. Is there a reason why different logarithms are used? If so, what version of the formula should I be using? It seems to matter in the results.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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In many of the resources I've found in regards to the Black-Scholes Formula, it uses the natural logarithm (ln). However, in the textbook that I am using (by Sheldon Ross), it uses the regular logarithm (log). Everything else is the same, except for that. Needless to say, a different answer results depending on which logarithm form is used. For example, in one problem I've done, if I use the natural logarithm I get a cost of $1.82, but if I use the regular logarithm, I get a cost of $-1.37.
Is there a reason why different logarithms are used? If so, what version of the formula should I be using? It seems to matter in the results.
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