Which of the following statements is true?
A)The Black Scholes model is the simplest to use and best used for complex situations.
B)The binomial model does not handle options with dividend payments prior to expiration date.
C)The Black Scholes model adequately handles the valuation of an American put.
D)The binomal model is better for complex situations and is the simplest tool to use.
E)The Black Scholes model is simpler to use, but for complex situations, the binomial model is the necessary tool.

Question

Quizplus · Accepted Answer

The Black Scholes model is simpler and used for European options, while the binomial model is more flexible and can handle complex situations like American options and dividends.

Which of the Following Statements Is True