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What Is the Black-Scholes Model and What Are Its Core Inputs?

The Black-Scholes model is a mathematical model used to estimate the theoretical price of European-style options. Its core inputs are: the current price of the underlying asset, the option's strike price, the time to expiration, the risk-free interest rate, and the implied volatility of the underlying asset.

It assumes a continuous, efficient market with no transaction costs.

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