Business, 03.05.2021 18:20 samariahmiddlebrooks

Which of the following is true: The BSM model combined with the put call parity can be used to give the theoretical price of an American put option. One of the variables that influences the price of the option is the expected return on the stock. Since dividends could trigger an early exercise of an American call, the BSM formula dividend adjustment will provide the correct price of an American call. The BSM formula requires cumulative probabilities from the lognormal distribution. The BSM model may be used with currency options by replacing the dividend yield with the foreign interest rate.

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Which of the following is true: The BSM model combined with the put call parity can be used to give...

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