Which one of the five factors included in the Black-Scholes option pricing model cannot be directly observed?
A) Risk-free rate
B) Strike price
C) Standard deviation
D) Stock price
E) Life of the option

Question

Quizplus · Accepted Answer

Standard deviation, which represents the volatility of the stock's returns, cannot be directly observed and must be estimated from historical data or implied by market prices.

Which One of the Five Factors Included in the Black-Scholes