Discuss the Black-Scholes formula on derivative pricing.

Question

30 Aug 2021

Answer :

Word Count : 641

Black-Scholes-Merton formula is an estimate of the prices of European call and put options, with the core difference between American and European options being that European options can only be exercised on their one exercise date versus American call options that can be exercised any time up to that expiration date. It's also used only to determine prices of non-dividend paying assets.

The Black–Scholes-Merton formula of value for a European call option is:

(note: the formula for a European put option is similar)

Image ignouassignments-ignouacademy-com--p-formula-29244

Image ignouassignments-ignouacademy-com--p-pricing-88225

The Black-Scholes model, aka the Black-Scholes-Merton (BSM) model, is a differential equation widely used to price options contracts. The Black-Scholes model requires five input variables: the strike price of an option, the current stock price, the time ____ __________ ______ _____ _________.
________ ____ _____ _________ _________ _______ _____.
________ _______ __________ ________ _____ __________.
__________ _______ _____ ___ _______ _______ _______ ______ _______ ___.
_______ ___ _____ ____ _________ __________.
_______ _______ _______ _________ _________ _______ ______ _____.
______ ______ ____ ___ _____ ________ _____ ______ _______.
_____ _______ ______ __________ _________ _______ ____ _______ ___ _____ _______.
_________ ____ ______ _______ ___ _____ _________.
______ ____ __________ ___ _______ _________ ___.
_____ _________ __________ ________ ______.
_______ ___ _________ _____ _________ _____.
________ _____ ____ ______ ________ _________ _________ _______ _____ __________ ____.
_________ ________ ___ _______ ____ ___ ____ __________ __________ _________ ___.
______ ______ ________ ___ ________.
____ ________ _____ _________ _______ ____ ____ ______ ____ _______ ___ _________.
______ _______ ___ __________ ______ _____.
_______ _________ ______ _________ ________ _________ _______ ______ ___ ___.
_____ _______ __________ ____ _________.
____ ________ ________ _____ _______ _____ __________ __________ ___ _____ __________.
_____ ____ ___ ____ _________ ___ ______ _______ ___ ________ ___ _________.
_____ ________ _________ _________ __________ ____ ________ _____ ________ ___ _____ _____.
__________ _______ _______ ____ ___.
___ ________ __________ ___ _______ _____ __________ ________ _________ ___.
_________ __________ _______ ___ ___.
_____ ______ _______ _________ _____.
__________ _________ ____ ___ ____ ____ ______ __________ __________.
________ _____ ____ _________ ________ ____ ____.
_________ _________ _________ ______ __________ ______ _________ __________ _______ _____ ___ ______.
__________ __________ ___ ___ _____ ________ _______.
_________ _______ _____ ________ _____ ____ _____ _____ _______ _________.
_____ _______ ________ _______ ________ _______ _____ ______ ____ __________ ____.
______ ________ _____ ____ __________.
______ ____ _______ _______ __________ _______ ________ ____ _______ _________.
___ __________ __________ _______ ____ ________ _______ _____ ______ ___ _______ ___.
_____ __________ _______ _______ ____ ______ _____ ____ __________ __________.
________ ____ ______ _____ ________ ___ ________ ________ __________ ________.
_________ _______ ________ ____ _______ _____ ____ ____.
_________ __________ ___ _________ ___ _______ ______ _________ __________ ______ _____ ________.
__________ _________ __________ ___ ______ _______ ____.
________ __________ _____ _______ ________ ______ _____ ___ ______ ____.
___ ___ _______ _______ ___.
_____ ________ ________ ________ ________ _______ _____ ___ ______ ______.
___ ____ ___ ___ __________ ___.
____ ___ ____ ______ _______.
________ _____ _____ _____ ___.
______ _____ _________ ______ ________ _________ _____.
______ ___ _____ ________ ____ _______ _____ ________ ________ __________ ___ ____.
________ _________ ______ ______ ____ _________ ____ _______.
_________ ________ ________ __________ _____ ________ ___ _________ _________.
____ ___ _____ ___ _____ _________ __________ ________ ______ ________.
________ ________ _____ _______ __________ _________ __________.
_________ __________ ______ _________ _________ _____ _____ ___ ____ _____.
____ ____ __________ _______ ___.
________ ______ ____ ___ _____ ______ ________ ________ ______.
_________ _________ ____ __________ _____.
____ _____ __________ ____ ___ ______ ________ __________.
____ ___ _____ ________ ________ __________.
______ ___ ____ _____ ________.
_________ ____ ____ __________ ___ ________ ________ ____ ________ _____ _________.
_________ _______ _______ ______ ____ _____.
________ ___ _____ ________ ___ __________ ____ _______ _____ _____.
____ _____ _______ _______ ______ __________ ____.
Get Full Answer on WhatsApp

IGNOU Solved Assignments Assignments Ignou Projects Project Previous Year Solved Exam Papers Notes Notes Sample Question Papers Sample Question Papers

IGNOU NEWS

Assignment Submission Last Date Extended Till 30 June 2026 Click Here★★★IGNOU June 2026 TEE Date Sheet Released Click Here★★★