Use the following information to answer the question(s)below.
(Please use a copy of the Cumulative Probabilities for the standard normal distribution for these problems. )
Taggart Transcontinental's stock has a volatility of 25% and a current stock price of $40 per share.Taggart pays no dividends.The risk-free interest rate is 4%.
-Which of the following is NOT an input required by the Black-Scholes option pricing model?
A)The expected volatility of the stock
B)The expected return on the stock
C)The risk-free interest rate
D)The current stock price

Question

Quizplus · Accepted Answer

The Black-Scholes model requires the current stock price, the risk-free interest rate, the expected volatility of the stock, the time to expiration, and the strike price of the option. The expected return on the stock is not an input required by the model.

Use the Following Information to Answer the Question(s)below