If historical data rejects the BlackScholesMerton model, a. Can the model still be used for pricing options?

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If historical data rejects the Black–Scholes–Merton model,
a. Can the model still be used for pricing options? Explain your answer.
b. Can the model be used for hedging option positions? Explain your answer.

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An Introduction to Derivative Securities Financial Markets and Risk Management

ISBN: 978-0393913071

1st edition

Authors: Robert A. Jarrow, Arkadev Chatterjee

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Question Posted: Dec 02, 2015 03:55 AM

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If historical data rejects the BlackScholesMerton model, a. Can the model still be used for pricing options?

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a The model can still be used for pricing options but only using calibration that is impli...View the full answer

An Introduction to Derivative Securities Financial Markets and Risk Management

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