19. To compute the value of a put using the Black-Scholes option pricing model,
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Question
19.
To compute the value of a put using the Black-Scholes option pricing model, you:
A.
First have to apply the put-call parity relationship.
B.
First have to compute the value of the put as if it is a call.
C.
Compute the value of an equivalent call and then subtract that value from one.
D.
Compute the value of an equivalent call and then subtract that value from the market price of the stock.
E.
Compute the value of an equivalent call and then multiply that value by e-rt.
19.
To compute the value of a put using the Black-Scholes option pricing model, you:
A.
First have to apply the put-call parity relationship.
B.
First have to compute the value of the put as if it is a call.
C.
Compute the value of an equivalent call and then subtract that value from one.
D.
Compute the value of an equivalent call and then subtract that value from the market price of the stock.
E.
Compute the value of an equivalent call and then multiply that value by e-rt.
Explanation / Answer
.
To compute the value of a put using the Black-Scholes option pricing model, you
B First have to compute the value of the put as if it is a call .
Reason
The Black–Scholes model is a mathematical model for calculation of the price of European-style options.
The Black–Scholes equation is a partial differential equation, which describes the price of the option over time.
method is Same either for call option or for put option valuation .
.
To compute the value of a put using the Black-Scholes option pricing model, you
B First have to compute the value of the put as if it is a call .
Reason
The Black–Scholes model is a mathematical model for calculation of the price of European-style options.
The Black–Scholes equation is a partial differential equation, which describes the price of the option over time.
method is Same either for call option or for put option valuation .
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