Question

The following input is not needed to solve the option price in the Black-Scholes-Merton framework: Group...

The following input is not needed to solve the option price in the Black-Scholes-Merton framework:

Group of answer choices

the risk-free rate of interest

the asset price

the asset’s risk premium

the time to maturity

please provide explanation

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Homework Answers

Answer #1

The answer is the assets risk premium. This because it is not accounted anywhere in the BSM module to value call or put.

The rest of the variables are accounted. The detailed formula is as follows :-

a

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