What do you guys think this will be tested on the exam? Calculations?

Yes. Along with the derivation. My friend helps CFAI with the test paper. If you want to know the likelihood of this being tested, read the LOS concerning Black Scholes again. It has the answer.

Well, Schweser’s of the opinion that you aren’t actually expected to memorize the formula. You are expected to ‘explain’ the BSM model, not recite it by heart. This does mean you need to understand what it does, its components (for example that N(d1) is delta), its constraints, when it can and can’t be used, etc.

agree with grumble IMO If you could interpret the individual components (Nd1 , Nd2 etc ) you could do a decent job at it , even if you dont know the formula for d1,d2 or volatility

Thanks, what grumble said is what I thought. The formula is a beast. I could see it leak over to deferred compensation as well.