Black Scholes Merton

In the 2013 Mock Answers regarding an American Option, it says “With only a few very advanced variations, the Black-Scholes-Merton’ model does not price American options.”

I dont get this whatsoever, I thought BSM was for American option and Black model was for European. I dont get why BSM cannot price American options?


The Black model is for forwards, not American options.

BSM prices European options. Period.

Thanks. Checked it in the curriculum and you were right. I knew I was mixing up something

You’re quite welcome.

Even though that happens occasionally, I understand that it can still come as a shock.