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Options Flashcards

(4 cards)

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1
Q

What is the return distribution assumed by BSM

A

Log-normal

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2
Q

Are transaction costs included in BSM

A

No

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3
Q

Does BSM assume American or European Expiry

A

American

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4
Q

What is American option vs European option

A

AMERICAN OPTION CAN BE EXERCISED ANY TIME BEFORE EXPIRY DATE

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