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Someone offers the following rationale for using the Black-Scholes-Merton model to price options: I believe the stock price follows a lognormal distribution, and the model

Someone offers the following rationale for using the Black-Scholes-Merton model to price options: I believe the stock price follows a lognormal distribution, and the model allows me to model how the risk-free rate changes over the life of the option. their beliefs about the BSM model are

A.

both incorrect

B.

both correct

C.

mixed: one correct, one incorrect

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