The Black formula prices an option on an instrument with a positive cost of carry.

Name: The Black formula prices an option on an instrument with a positive cost of carry.
Brand: Quizplus
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Question

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The Black formula, also known as the Black-76 model, is used for pricing options on futures contracts, which do not have a direct cost of carry like dividends or interest rates, unlike the Black-Scholes model which is used for options on instruments with a cost of carry.

The Black Formula Prices an Option on an Instrument with a Positive