Black-Scholes Formula and European Option Pricing › Quiz

Michael BrenndoerferNovember 28, 20251 min read
Quantitative FinanceAll chapters
Part 5 of 15Stochastic Calculus and Pricing Theory
Chapter 30Black-Scholes Formula and European Option Pricing › Quiz
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Black-Scholes Formula and European Option Pricing

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In the Black-Scholes call option formula C=SN(d1)−Ke−rTN(d2)C=SN(d_1)-Ke^{-rT}N(d_2), what does the term Ke−rTN(d2)Ke^{-rT}N(d_2) represent?