One key difference between the Black and Scholes (B&S)option pricing model and the binomial model is that the B&S model assumes the ____ is known whereas the binomial model does not.

Question

Quizplus · Accepted Answer

The Black and Scholes model assumes that the standard deviation of the underlying asset is known, while the binomial model does not make this assumption. The other variables (current market value, risk-free rate, strike price, and time until expiration) are used in both models.

One Key Difference Between the Black and Scholes (B&S)option Pricing