Ask Question
BusinessBusiness
27 August, 03:28

The Black-Scholes option pricing formula is used widely in practice, especially by international banks in trading OTC options. is not widely used outside of the academic world. works well enough, but is not used in the real world because no one has the time to flog their calculator for five minutes on the trading floor. none of the options

+5
Answers (1)
  1. 27 August, 04:15
    0
    The Black-Scholes option pricing formula is used widely in practice, especially by international banks in trading OTC options.

    Explanation:

    The Black-Scholes option pricing formula is used to calculate the fair price of a call or put option. It is done by considering six variables:

    volatility type of option underlying stock price time strike price risk-free rate

    The price for a risky asset (e. g. private corporation stock) is calculated against the price of a risk free asset (e. g. government bond). It can only be used to set a price for European options since American options can be exercised before the expiration date which doesn't fit into the fixed variables of the formula.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The Black-Scholes option pricing formula is used widely in practice, especially by international banks in trading OTC options. is not ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Although e-mail has replaced paper memos for many messages inside organizations and for some letters to external audiences, hard-copy messages tend to carry more weight and are taken more seriously. True or False
Answers (1)
Antique Brass Company has budgeted sales volume of 127 comma 000 units and budgeted production of 110 comma 000 units, while 30 comma 000 units are in beginning finished goods inventory.
Answers (1)
Which two things do benefits tell you about a product
Answers (1)
The cost of an activity paid for by the individual and the third party is defined as
Answers (2)
19. Why does the government carefully monitor horizontal mergers? A. The new firm may discontinue some of the original firms' products. B. The resulting single firm might gain monopoly power in its market. C.
Answers (1)
New Questions in Business
Beasley, Inc., reports the following amounts in its December 31, 2021, income statement. Sales revenue $ 350,000 Income tax expense $ 36,000 Interest expense 13,000 Cost of goods sold 120,000 Salaries expense 35,000 Advertising expense 25,000
Answers (1)
Minimum wage laws have the smallest effect on which segment of the labor force? a. low-skilled labor b. teenagers c. skilled workers d. unemployed workers
Answers (1)
A retailer buys a painting for $200. she sets the selling price at $450. when the painting doesn't sell after two months, she raises the price to $800 to appeal to a different market. the painting sells for $800 the next day.
Answers (1)
Kathy Brooks is a franchisee who wishes to donate her old HRB workstations and server to a local charity for a fundraising auction.
Answers (1)
True or false Every risk an individual faces can be insured
Answers (2)
Home » Business » The Black-Scholes option pricing formula is used widely in practice, especially by international banks in trading OTC options. is not widely used outside of the academic world.
Sign Up Forgot Password?