Nobel-prize winning black-scholes options pricing model

Assignment Help Financial Management

Reference no: EM131074578

The nobel-prize winning black-scholes options pricing model has been the worst widely used trading tool for options in the past decades.is it really such a perfect mathematical model to compute option value? if not, how do market participants make adjustments or corrections in practice? please use the facebook data and a standard B-S calculator to support your conclusion.

Reference no: EM131074578

Questions Cloud

Costs based on the activities utilized by the customer : A company using activity based pricing marks up the direct cost of goods by 0.27 plus charges customers for indirect costs based on the activities utilized by the customer. Indirect costs are charged as follows: $6.10 per order placed; $3.00 per sepa..

Calculate the net present value of the system : The law firm of Bushmaster, Cobra and Asp is considering investing in a complete small business computer system. The initial investment will be $50,000. The computer is in the 5-year MACRS category, and the firm's tax rate is 34%. Calculate the net p..

What are the ethical considerations involved in decision : You are the CEO of a small pharmaceutical company. Your company is privately held, with 75 shareholders; however, you own a majority of the shares and thus, you maintain control over the Board of Directors. Describe how those theories apply to this s..

The discrepancy between the feasibility of project : The discrepancy between the feasibility of a project in a host country from the perspective of the U.S. parent versus the subsidiary administering the project is likely to be greater for projects in countries where:

Nobel-prize winning black-scholes options pricing model : The nobel-prize winning black-scholes options pricing model has been the worst widely used trading tool for options in the past decades.is it really such a perfect mathematical model to compute option value? if not, how do market participants make ad..

Unit in variable costs and fixed costs : A company has $6.70 per unit in variable costs and $4.00 per unit in fixed costs at a volume of 50,000 units. If the company marks up total cost by 0.44, what price should be charged if 69,000 units are expected to be sold?

What is the profitability index decision rule : Describe how the profitability index is calculated and describe the information this measure provides about a sequence of cash flows. What is the profitability index decision rule?

The overall standard deviation of returns of the portfolio : The standard deviation of Home Depot Share prices is 30% and that of General Motors shares is 30%. When I hold both stocks in my portfolio and the stocks returns have zero correlation, the overall standard deviation of returns of the portfolio is:

Superior method of evaluating the cash flows from project : Why is NPV considered a superior method of evaluating the cash flows from a project? Suppose the NPV for a project's cash flows is computed to be $2,500. What does this number represent with respect to the firm's shareholders?

User Account

All Pages