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The Black-Scholes option pricing model (OPM) was developed in 1973. The creation of the Black-Scholes OPM played a significant role in the rapid growth of
The Black-Scholes option pricing model (OPM) was developed in 1973. The creation of the Black-Scholes OPM played a significant role in the rapid growth of options trading. The derivation of the Black-Scholes Option Pricing Model rests on the concept of a According to the Black-Scholes Option Pricing Model, if the exercise price, X, increases, the value of the call option Happy Orange Storage Company has a current stock price of $28.00. A call option on this stock has an exercise price of $28.00 and 0.25 year to maturity. The variance of the stock price is 0.09, and the risk-free rate is 6%. You calculate d_1 to be 0.18 and N(0.18) to be 0.5714. Therefore, 62 will be 0.03 and N(0.03) will be 0.5120. Using the Black-Scholes Option Pricing Model, what is the value of the option? $1, 689 $1, 595 $1, 877 $2, 065
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