Derivatives - Black Scholes Merton Model

CFA Level II Derivatives
#1

Hi Everyone,

Regarding Readings 41.H to 41.K - are you memorising the entire formulas and are we expected to apply them in the exam on questions? I’m a bit confused by reading Schweser and the LOS…

For example…Describe how the BSM model is used to value European options on currencies and equities.

#2

There is no LOS that says you have to use the BSM model to value an option.

However, I have heard from candidates in the past that there have been questions on the exam that have you do just that. Hearsay on my part, so take it for whatever it’s worth.

#3

I think yes, but calculating d1 (or may be d2) won’t be required.