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Which of the Following Was NOT a Key Insight That

Question 8

Multiple Choice

Which of the following was NOT a key insight that helped Fischer Black,Myron Scholes,and Robert Merton formulate their 1973 option pricing model?


A) adjustment for known dollar dividends
B) the lognormal distribution for stock prices
C) the no-arbitrage principle
D) hedging an option with a stock and the creation of a "perfect hedge"
E) the focus on a stock's price return's volatility as opposed to measuring a risk-premium

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