You are on page 1of 2

How to remember the Black-Scholes-Merton assumptions : CFA 6/21/17, 00:17

MY SUBREDDITS POPULAR - ALL - RANDOM | ASKREDDIT - FUNNY - WORLDNEWS - PICS - GAMING - TODAYILEARNED
MORE

reddit.com CFA comments Want to join? Log in or sign up in seconds. | English

Level 2 How to remember the Black-Scholes- search


31 Merton assumptions
submitted 1 month ago by ju2tin Level 2 Candidate
this post was submitted on 10 May 2017
Black, Scholes, and Merton were not just finance
guys. They were also a three-man motorcycle 31
gang, and they would REV their engines so hard points
(97% upvoted)
that their bikes would FLY away:
Risk-free rate constant & known shortlink: https://redd.it/6ada63

European options
Volatility of asset returns constant & known
username password
Frictionless markets
Lognormally-distributed asset returns remember me reset password login
Yield (continuously-compounded) on asset is
constant
Submit a new text post
When you remember this on the test because of
three finance professors on flying motorcycles,
you'll thank me. :-)
CFA
8 comments share
subscribe

6,174 readers
all 8 comments 100 users here now
sorted by: best
Important Links
[] karshokr Level 3 Candidate 6 points 1 month ago
Days Until CFA Exam
Heads-up to Level 2 Candidates: you do NOT need to
know the actual formula and they won't ask you to Changes to curriculum 2017
manipulate the equation or calculate anything to do with
Level 1
the BSM, just assumptions as you mentioned.
Level 2
I only found this out weeks before the L2 exam and wow Level 3
what a relief.
permalink embed
Rules
[] SnazzleSauce Level 3 Candidate 2 points 1 month ago

Also that d(1) is delta iirc. And they ask about the Please follow these rules while using this
subreddit.
Greeks.
permalink embed parent Important Links
Do not submit memes or advice animals.
No attempts at redirecting discussions to
external forums
[] ju2tin Level 2 Candidate [S] 3 points 1 month ago
Avoid the use of anxious tones in posts
Right, of course you have to know the Greeks related to testing
and how they affect BSM inputs; that's its own
Changes to curriculum 2017
Read the Reddiquettes
LOS.
He's just saying you're not responsible for MODERATORS message the moderators

https://www.reddit.com/r/CFA/comments/6ada63/how_to_remember_the_blackscholesmerton_assumptions/?st=j45tyc4l&sh=65cbf906 Page 1 of 2

Rules
How to remember the Black-Scholes-Merton assumptions : CFA 6/21/17, 00:17

knowing the full BSM equation and sub-formulas


UpDown CFA
and using them to solve for option values.
crazy_lurker Passed Level 3
permalink embed parent mattlas Level 3 Candidate
about moderation team
[] LoyalServantOfBRD Level 2 Candidate 2 points 1
month ago
< > discussions in r/CFA X
N(d1) is delta.
10
d1 is meaningless outside of its position in the EdX.org offering Statistics and R Programming
standard normal distribution. Course
permalink embed parent

[] postgradmess Level 2 Candidate 1 point 1 month ago



I saw the full Black Scholes on the Kaplan L2 cheat
sheets and wondered how the exam could possibly
ask us to manipulate such an equation with just our
financial calculator
permalink embed parent

[] anaconda1189 Level 2 Candidate 6 points 1 month ago



This and "cow boys sing pretty" for put call parity are now
my favorites.
Thanks!!!
permalink embed

[] Pho6 Level 2 Candidate 1 point 1 month ago



i'm definitely using this now!
Thanks!!!
permalink embed

[] BrickTopp Level 2 Candidate 1 point 1 month ago



This is awesome. Thanks.
permalink embed

about help apps & tools <3


blog site rules Reddit for iPhone reddit gold
about FAQ Reddit for Android redditgifts
source code wiki mobile website
advertise reddiquette buttons
careers mod guidelines
contact us

Use of this site constitutes acceptance of our User Agreement and Privacy Policy. 2017 reddit inc. All rights reserved.
REDDIT and the ALIEN Logo are registered trademarks of reddit inc.

https://www.reddit.com/r/CFA/comments/6ada63/how_to_remember_the_blackscholesmerton_assumptions/?st=j45tyc4l&sh=65cbf906 Page 2 of 2