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== The Black Scholes Model ==
== The Black-Scholes Model ==
The Black-Scholes model for a stock price assumes that the stock price follows geometric Brownian motion with constant drift and volatility. More precisely, if S(t) the stock price at time t, then
The Black-Scholes model for a stock price assumes that the stock price follows geometric Brownian motion with constant drift and volatility. More precisely, if S(t) the stock price at time t, then