Which one of the following is not included as an input for the Black-Scholes option pricing model?
A)Standard deviation
B)Time to maturity
C)Exercise price
D)Par value
E)Continuously compounded interest rate

Question

Quizplus · Accepted Answer

Par value is not relevant to the Black-Scholes option pricing model, as it pertains to the face value of a bond and is not a parameter in the option pricing formula. The other inputs, including standard deviation, time to maturity, exercise price, and continuously compounded interest rate, are all necessary for calculating the value of an option using the Black-Scholes model.

Which One of the Following Is Not Included as an Input