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Black-Scholes ModelKnowledge Center |
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What is the Black-Scholes Model? Meaning.Black-Scholes Model is a pricing model of financial instruments, and in particular stocks and options, derived by Fischer Black and Myron Scholes in 1973. It is based on arbitrage arguments that uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the standard deviation (volatility) of the stock return. The key assumptions of the model are:
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