A formula to calculate the value of European style options. The formula was introduced in 1973 by Fischer Black and Myron Scholes. The Black-Scholes formula assumes that the primary factors affecting the price of an option are the value of the underlying asset, the exercise price of the option, the volatility of the underlying asset, the risk-free rate of interest, and the remaining time to expiration.

# Black-Scholes Option Pricing Model - Investment & Finance Definition

Webster's New World Finance and Investment Dictionary Copyright © 2010 by Wiley Publishing, Inc., Indianapolis, Indiana.

Used by arrangement with John Wiley & Sons, Inc.

Used by arrangement with John Wiley & Sons, Inc.

Link to this page

Cite this page

**MLA Style**

"Black-Scholes Option Pricing Model." YourDictionary, n.d. Web. 19 October 2018. <http://www.yourdictionary.com/black-scholes-option-pricing-model>.

**APA Style**

Black-Scholes Option Pricing Model. (n.d.). Retrieved October 19th, 2018, from http://www.yourdictionary.com/black-scholes-option-pricing-model