The Black-Scholes option pricing model is dependent on which ﬁve parameters?

Question

Quizplus · Accepted Answer

The Black-Scholes option pricing model is dependent on the share price, exercise price, risk-free rate, variance, and time to maturity. Option pricing models need to take into account the current stock price (share price), the price at which an option can be exercised (exercise price), the time left to expiration (time to maturity), the risk-free interest rate (risk-free rate), and the volatility of the underlying asset (variance). Choice D correctly includes all of these parameters.

The Black-Scholes Option Pricing Model Is Dependent on Which ﬁVe