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Identify the Correct Sentence.In the Black-Scholes-Merton Model (1973)

Question 20

Multiple Choice

Identify the correct sentence.In the Black-Scholes-Merton model (1973) :


A) the European option price can be computed as its discounted expected payoff using the actual probabilities and the risk-free rate
B) the European option price can be computed as its discounted expected payoff using the actual probabilities and the expected return
C) the European option price can be computed as its discounted expected payoff using the pseudo-probabilities and the expected return
D) the European option price can be computed as its discounted expected payoff using the pseudo-probabilities and the risk-free rate
E) None of these answers are correct.

Correct Answer:

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