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


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
©2004-2016 Investor Glossary - All rights reserved - Terms of Use