In the Black-Scholes option pricing model:
A) all of the inputs except two are observable.
B) all of the inputs except one are observable.
C) none of the inputs in the model are observable.
D) all of the inputs in the model are observable.

Question

Quizplus · Accepted Answer

In the Black-Scholes model, all inputs except the volatility of the underlying asset are observable. Volatility must be estimated.

In the Black-Scholes Option Pricing Model