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    • Question

      The Black-Scholes model is used for the pricing

      of:
      A Index futures Correct Answer Incorrect Answer
      B Options Correct Answer Incorrect Answer
      C Equity share price Correct Answer Incorrect Answer
      D Bond price Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      An option pricing model is a mathematical tool used to calculate the theoretical or fair value of an option contract. Popular models like Black-Scholes and the binomial model use variables such as the underlying asset's price, strike price, volatility, time to expiration, and risk-free interest rate to help traders make informed decisions and manage risk.   The Black-Scholes model is a mathematical equation that's used for pricing options contracts. It's based on time value and intrinsic value of the option.

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