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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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