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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Question
What is the purpose of the Black–Scholes Option Pricing Model?
Expert Solution
Introduction
Black-Scholes is a pricing model used to determine the fair price or theoretical value for a call or a put option based on six variables such as instability, type of option, underlying stock price, time, strike price, and the risk-free rate.
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