Q 18

# Which of the following statements is FALSE? A)If you take the option price quoted in the market as an input and solve for the volatility,you will have an estimate of a stock's volatility known as the implied volatility. B)The Black-Scholes formula can be used to price American or European call options on non-dividend-paying stocks. C)We need to know the expected return on the stock to calculate the option price in the Black-Scholes Option Pricing Model. D)We can use the Black-Scholes formula to compute the price of a European put option on a non-dividend-paying stock by using the put-call parity formula.

Multiple Choice