The correct answer is: B. no dividends.
A call option is a contract that gives the buyer the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price on or before a specified date. The seller of the call option, also known as the option writer, is obligated to sell the asset if the buyer exercises the option.
The Black-Scholes model is a mathematical model that is used to determine the price of a call option. The model takes into account the following factors:
- The strike price of the option
- The expiration date of the option
- The current price of the underlying asset
- The volatility of the underlying asset
- The risk-free interest rate
The Black-Scholes model does not take into account the payment of dividends. This is because dividends are paid out to shareholders, not option holders. Therefore, the price of a call option is not affected by the payment of dividends.
Here is a brief explanation of each option:
- Option A: dividends. This is incorrect because the Black-Scholes model does not take into account the payment of dividends.
- Option B: no dividends. This is correct because the Black-Scholes model does not take into account the payment of dividends.
- Option C: current price. This is incorrect because the Black-Scholes model takes into account the current price of the underlying asset.
- Option D: past price. This is incorrect because the Black-Scholes model does not take into account the past price of the underlying asset.