The Black-Scholes model differs from the binomial in that
A)The mathematics it requires is much simpler.
B)It provides closed-form solutions for option prices,so can price European options faster than the binomial model.
C)It can handle stochastic interest rates more efficiently than the binomial.
D)It was developed after the binomial model and is therefore more current.

Question

Quizplus · Accepted Answer

The Black-Scholes model provides closed-form solutions for option prices, so it can price European options faster than the binomial model. The other options listed are not accurate statements about the differences between the two models.

The Black-Scholes Model Differs from the Binomial in That