Homework answers / question archive / Curtin University - FINANCE INVE3000 Which of the following statements is true? The Black-Scholes-Merton model is used to price all vanilla options, because it is an exact closed form, analytical formula

Curtin University - FINANCE INVE3000 Which of the following statements is true? The Black-Scholes-Merton model is used to price all vanilla options, because it is an exact closed form, analytical formula

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Curtin University - FINANCE INVE3000

Which of the following statements is true?

1. 1. The Black-Scholes-Merton model is used to price all vanilla options, because it is an exact closed form, analytical formula.
   2. The Black-Scholes-Merton price of a European vanilla option is an expected value of the asset.
   3. The Black-Scholes-Merton price of a European vanilla option is the expected profit from the option.
   4. The   Black-Scholes-Merton      model    allows    an   option   to   be   priced assuming the investment is risky.
   5. None of the above.