BLACK SCHOLES MODEL
Price variation model used to estimate the price of a European call option. The model accounts the value of heavily traded assets pegs a geometric Brownian motion, which constantly drifts and fluctuates. Designed by Fisher Black, Robert Merton, and Myron Scholes in 1973, it integrates the following: consistent price variation of the stock option, money’s time worth, option’s strike price, and option’s maturity. Also called Black-Scholes-Merton Model.
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