Exam 24: a Black Scholes Option Pricing Model

The Black and Scholes option pricing model makes an assumption that stock prices are normally distributed with a constant mean returns over the period of the option.

The Black and Scholes option pricing model makes an assumption that markets have normal friction.

The Black and Scholes option pricing model makes an assumption that markets are frictionless.

One of the foundations of the Black Scholes Option Pricing Model was that the shares of stock and call option combined to form

The Black and Scholes option pricing model makes an assumption that the stock pays dividends during the time the option is outstanding.

The Black and Scholes option pricing model makes an assumption that the option could only be exercised at maturity.

The Black and Scholes option pricing model makes an assumption that markets have taxes and transactions costs.

The Black and Scholes option pricing model makes an assumption that markets have no taxes or transactions costs.

The Black and Scholes option pricing model makes an assumption that the option could be exercised before maturity.

Which of the following is NOT an assumption of the Black and Scholes Option Pricing Model?

The Black and Scholes option pricing model makes an assumption that stock prices are lognormally distributed with a constant variance for the underlying returns.

The Black and Scholes option pricing model makes an assumption that the stock pays no dividends or makes no other distributions.

For call options the price is positively related to

In the Black and Scholes Option Pricing Model the put and call prices are a function of which of the following:

What does the Black and Scholes Option Pricing model mean by "markets are frictionless"?

For put options,the price is always positively related to

For call options,the positive relationship between price and time is