Research Suggests That Option-Pricing Models That Allow for the Possibility

Multiple Choice

Research suggests that option-pricing models that allow for the possibility of ________ provide more accurate pricing than does the basic Black-Scholes option-pricing model.
I. early exercise
II. changing expected returns of the stock
III. time varying stock price volatility

A) II only
B) I and III only
C) II and III only
D) I, II, and III