Business and Personal Finance Dictionary

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• BLACK-SCHOLES EQUATION
  
  An equation used to determine the value of option securities prices based on the relationship between six variables -- the current underlying asset price (S), the option strike price (K), the option time-to-expiration (t), the risks to return (r), the underlying asset payout return (d), and the underlying asset volatility (s) -- work together to determine the value of a standard option.
  
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