Which of the following factors is (are) reason(s) why the Black-Scholes-Merton option pricing model is not appropriate for valuing options on corporate bonds?
Bonds have credit risk.
Have an upper price bound.
Bonds do not have constant price volatility.
Bonds are not priced by arbitrage.
A. I and II. B. II and III. C. III and IV. D. IV only.
