Quiz Ch 16 – Analyzing Black-Scholes Call Option Discrepancy

Essentials of Investments

Bodie, Kane, and Marcus

12th Edition

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When comparing the Black-Scholes call option value at $3.50 to the actual call price of $3.75 for a non-dividend paying stock, should we suspect that the option is __________ or that the volatility used in the model is too __________?

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