Why is the Black Scholes formula not viable when pricing a spread option for electricity?

What will be an ideal response?

Answer:

An assumption of the Black Scholes formula is a normal distribution of payoffs. The marginal profit of a spread option is not log normally distributed and has a floor of 0.

Business

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Which of the following is not a single-purpose credit card?

A) Shell Oil B) Wells Fargo Visa C) Toys R Us D) Target E) Macy's

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