CFA Practice Question

There are 227 practice questions for this study session.

CFA Practice Question

The BSM model can be described as having two components: a stock component and a bond component. The BSM model call value is ______.

A. the stock component + the bond component
B. the stock component - the bond component
C. the bond component - the stock component
Correct Answer: B

For call options, the stock component is SN(d1) and the bond component is e-rTXN(d2). c = SN(d1) - e-rTXN(d2).

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