(2 points) Constant volatility (o) is not a necessary condition for the Black-Scholes option pricing formulas to work. When o (t) is a non-random function of time, we can use the average volatility in the computation of d1 and d2 to implement the pricing formulas. However, when stochastic volatility is present as characterized in a GARCH or Heston model, the Black-Scholes formulas no longer work; but we can apply Monte Carlo or binomial models to compute option prices. O TRUE O FALSE (2 points) Constant volatility (o) is not a necessary condition for the Black-Scholes option pricing formulas to work. When o (t) is a non-random function of time, we can use the average volatility in the computation of d1 and d2 to implement the pricing formulas. However, when stochastic volatility is present as characterized in a GARCH or Heston model, the Black-Scholes formulas no longer work; but we can apply Monte Carlo or binomial models to compute option prices. O TRUE O FALSE