The Black-Scholes model includes the following components:
I.the standard deviation of the underlying asset
II.present value of the strike price
III.current value of the underlying asset
IV.cumulative standard normal density functions
A)I only
B)I, II only
C)I, II, III only
D)I, II, III, IV

Question

Quizplus · Accepted Answer

The Black-Scholes model includes all four components listed: the standard deviation of the underlying asset (I), present value of the strike price (II), current value of the underlying asset (III), and cumulative standard normal density functions (IV). All of these components are necessary for the model to output an option price.

The Black-Scholes Model Includes the Following Components