What are the assumptions on which the Black-Scholes theorem is based? What are the important conclusions of the Black-Scholes theorem?
Introduction The Black-Scholes theorem is a foundational concept in financial economics and actuarial science. It provides a mathematical framework to price European-style options and has revolutionized the derivatives market. Developed by Fischer Black and Myron Scholes in 1973, and extended by Robert Merton, the model helps in understanding risk, pricing, and hedging strategies. In this […]