The choice of a valuation model will depend on the important features of each arrangement and the data availability necessary to use the model. For example, the Black-Scholes-Merton formula assumes...

The choice of a valuation model will depend on the important features of each arrangement and the data availability necessary to use the model. For example, the Black-Scholes-Merton formula assumes that options are exercised at the end of the option’s contractual term and that volatility, dividends, and risk-free interest rates remain constant over the contract’s term.