Of the variables in the Black-Scholes OPM, the ________ is not directly observable.
A) price of the underlying asset
B) risk-free rate of interest
C) time to expiration
D) variance of the underlying asset return

Question

Quizplus · Accepted Answer

The variance of the underlying asset return, also known as volatility, is not directly observable and must be estimated using historical data or market prices.

Of the Variables in the Black-Scholes OPM, the ________ Is