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Which of the following is NOT true regarding the Black-Scholes formula? The binomial solution converges to the Black-Scholes formula when taking infinite number of steps.
Which of the following is NOT true regarding the Black-Scholes formula? The binomial solution converges to the Black-Scholes formula when taking infinite number of steps. The Black-Scholes formula can price both European and American options. To derive the Black-Scholes formula, we assume the stock returns are normally and independently distributed. The Black-Scholes formula is also applicable on options with underlying assets such as foreign currencies
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