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Good day,
I would like to know with regards to BSOP what does d1, and d2 represents? And how do we know if we should calculate d2. I am doing a question called Marenga Co. and i was calculating d2 but the question answer doesnt calculate it. Can you please give me some understand ing on this area please?
Thanks in advance.You will have to give me a bit more information about the question. Which exam or which book did you get it from?
The formula for d1 and d2 are given on the formula sheet, and normally you will need to calculate both of them to be able to look up N(d1) and N(d2) in the normal distribution tables and be able to calculate the option price.
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