    

|
|
Black-Scholes Option Pricing Model |
|
|
|
|
|
| |
The Black-Scholes Option Pricing Model predicts an option's price given the strike price, expiration date, risk-free rate of return, stock price, and standard deviation of the stock's return. Wall Street was quick to adopt the Black-Scholes Option Pricing Model in the early 1970s although key assumptions of the Black-Scholes Option Pricing Model are obviously violated in the real world. In many contemporary Wall Street applications, more refined pricing models that adjust for these violations have replaced the seminal Black-Scholes Option Pricing Model. Large segments of the financial sector emerged due to the success of the Black-Scholes Option Pricing Model. Myron Scholes shared the 1997 Economics Nobel Prize with Black-Scholes Option Pricing Model development collaborator Robert Merton for this work. Fellow Black-Scholes Option Pricing Model namesake Fischer Black had passed away in 1995, but would have shared the award. Learning to derive the Black-Scholes Option Pricing Model is a key part of any mathematical finance curriculum today.
Rate this Black-Scholes Option Pricing Model definition...
|
|
|
|
 |
Where is the market headed? The answer may surprise you. Find out with the exclusive & Barron's recommended charts of Chart of the Day. |
|
Popular Terms: in escrow, stock split, deferred revenue, implied volatility, cancelled check, FICO score, wholly-owned subsidiary, required rate of return, phantom income, 401a, risk management, average price per share, annual return, margin rate, 144a, ex-dividend, 1031 exchange, ex-dividend date, class C shares, covered put, liquidity ratio, retained earnings, debt service coverage, VIX, current ratio, open position, diluted share, option premium, balance sheet, limit order, deferred tax, inflation, reverse mortgage, 1035 exchange, FTSE, LIBOR, per diem, dividends payable, stock market close, irrevocable trust, Key Rate Duration, APR, real GDP, EBITDA, minority interest, labor relations, Zero Cost Collar, quality assurance, command economy
|
|
| |