Investor Glossary-black-scholes option pricing modelInvestor Glossary-black-scholes option pricing modelInvestor Glossary-black-scholes option pricing modelInvestor Glossary-black-scholes option pricing modelInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Black-Scholes Option Pricing Model

The HTML to link to this page
 

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...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. 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: implied volatility, EBITDA, APR, liquidity ratio, labor relations, VIX, current ratio, 1031 exchange, balance sheet, ex-dividend, FTSE, risk management, Zero Cost Collar, retained earnings, dividends payable, stock market close, phantom income, diluted share, debt service coverage, required rate of return, 1035 exchange, command economy, inflation, 144a, real GDP, annual return, limit order, deferred tax, stock split, 401a, wholly-owned subsidiary, margin rate, class C shares, option premium, in escrow, open position, deferred revenue, Key Rate Duration, minority interest, per diem, ex-dividend date, covered put, reverse mortgage, cancelled check, average price per share, FICO score, quality assurance, LIBOR, irrevocable trust


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use