In the BS option pricing formula, when entering values for volatility and short rate, do we enter them as percentages or decimals?
Take the time unit to be a year, i.e. if we want to price something a year from now, we'd let T = 1.
I am not just looking for an answer, but also an explanation. If the answer is decimal, then what goes wrong when I use percentage? What would I need to "fix" in order to be able to enter percentages? (apart from just multiplying the parameter with 100 in the formula!)
Note: BS above, stands for Black–Scholes model, a equation that reflects the value of a given option based on multiple variables that are input to the equation.