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Option pricing theory has made vast strides since 1972, when Black and Scholes published their path-breaking paper providing a model for valuing dividend-protected European options.
Option pricing theory has made vast strides since 1972, when Black and Scholes published their path-breaking paper providing a model for valuing dividend-protected European options. Black and Scholes used a replicating portfolio a portfolio composed of the underlying asset and the risk-free asset that had the same cash flows as the option being valued to come up with their final formulation. In details, discuss the black-Scholes model of pricing
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