According to Black Scholes model, rate which is constant and known is classified as
A
short term return rate
B
long term return rate
C
risk free interest rate
D
risky rate of return
Correct Answer: risk free interest rate
According to Black Scholes model, rate which is constant and known is classified as risk free interest rate. The risk-free interest rate is the rate of return of a hypothetical investment with no risk of financial loss, over a given period of time.