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Volatility smile is referred to as evidence against the Black-Scholes model. Why is that? a. Black-Scholes model generates option premium close to the observed premium

Volatility smile is referred to as evidence against the Black-Scholes model. Why is that?


a.

Black-Scholes model generates option premium close to the observed premium if the observed stock volatility is used


b.

Black-Scholes model assumes that different options on a given stock have different values for implied volatility


c.

Volatility of returns on one and the same stock, over one and the same future period of time, can only take one value

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