Black Scholes Option Pricing Model Multiple Choice Questions with Answers – PDF Download

MCQ 1: According to the Black Scholes model, the stocks with the call option pays the:

1. dividends
2. no dividends
3. current price
4. past price

MCQ 2: The yield on Treasury bill with a maturity is classified as a risk free rate but must be equal to an:

1. option closing price
2. option beginning price
3. option expiration
4. option model

MCQ 3: According to the Black Scholes model, the purchaser can borrow fraction of security at risk free interest rate which is:

1. short term
2. long term
3. transaction cost
4. no transaction cost

MCQ 4: According to the Black Scholes model, the short term seller receives today's price which:

1. short term cash proceeds
2. proceeds in cheques
3. full cash proceeds
4. zero proceeds

MCQ 5: In an option pricing, a rises in risk free rate results in option's value:

1. slight time decreases
2. slight increases
3. slight decreases
4. slight time increases