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+## black-sholes model
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+### tl; dr
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+* mathematical equations that estimates the theoretical value of derivatives based on other investiment instruments
+* widely used to price options contracts
+* requires five input variables: the strike price of an option, the current stock price, the time to expiration, the risk-free rate, and the volatility
+* it posits that these instruments will have a lognormal distribution of prices following a random walk with constant drift and volatility
+* it derives the price of a european-style call option
+* assumptions: no dividents are paid out during the life of the options, markets are random, no transaction costs in buying the option, risk-free rate and volatility of the underlying assets are known and constant, the returns of the underlying assets are normally distributed.
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