The period of time over which there is at least one fixed input ...

[james0929]

The period of time over which there is at least one fixed input is the
 A) calendar year.
  B) long run.
  C) short run.
  D) market horizon.

Question 2

Derive the Black-Scholes formula to represent the relationship between the price of an option and the price of its underlying stock.

[dreamfighter72]

Answer to Question 1

C

Answer to Question 2

Let C be the value of a call option, with
S = current price of the underlying stock
K = the strike price
ln = natural logarithm to base e
r = interest rate
T = time to expiration
 = standard deviation of returns on underlying stock
N1(d1) and N2(d2) = cumulative standard normal distribution functions.
Then,
C = SN(d1) - Ke-rTN(d2),
With
d1 = ln(S/K) + (R + 22  T and d2 = d1 - T

[james0929]

Excellent

[carojassy25]

Gracias!