CFA Practice Question

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CFA Practice Question

In the BSM model, if d is less than zero, we can conclude that N(d) is ______.

A. less than zero
B. more than zero
C. less than 0.5
Correct Answer: C

N(d) is simply the standard normal cumulative distribution function. The standard normal distribution has a mean of 0. If d is less than 0, that means the cumulative distribution is less than 0.5.

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