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What did you learn about options and their use [their purpose] as derivative instruments? How is an option’s intrinsic value determined? Please reflect, then comment critically and discuss. Please...

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What did you learn about options and their use [their purpose] as derivative instruments? How is an option’s intrinsic value determined? Please reflect, then comment critically and discuss.
Please discuss the strengths and weaknesses of the Black-Scholes option pricing model. How can erroneous underlying assumptions of the model cause disastrous results? Please explore, discuss, and comment.

200 words with references

Answered Same Day Dec 25, 2021

Solution

David answered on Dec 25 2021
112 Votes
Question: What did you learn about options and their use [their purpose] as derivative
instruments? How is an option’s intrinsic value determined? Please reflect, then comment
critically and discuss.
Please discuss the strengths and weaknesses of the Black-Scholes option pricing model. How can
e
oneous underlying assumptions of the model cause disastrous results? Please explore, discuss,
and comment.
Solution: In this course I learned about various derivative instruments. I learned that options are
kind of derivative instruments which gives the option holder (buyer) the right (but not the
obligation) to sell (in case of put option) or purchase (in case of call option) any financial
security (stock or asset...
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