1
QuizMultiple Choice

Asset-backed Securities, Loan Sales, and Derivatives — Test

Question 1 • (AG Q4) Financial Literacy: 25-26 (JRush)

The Black-Scholes model was developed in 1973 and is still used today to figure out a fair price for _____.

Answer
A
stocks
B
bonds
C
options
D
money markets

Explanation

The Black-Scholes model estimates the theoretical fair value of financial options, using factors such as the underlying asset’s price, time to expiration, and volatility. It is not a model for pricing stocks, bonds, or money-market instruments. The correct choice is options.

AI-written and checked against the verified answer.

Next