What is the primary purpose of the black-scholes-merton

Assignment Help Business Economics
Reference no: EM131197654

What is the primary purpose of the Black-Scholes-Merton? How can historical data be used to identify risk? Volatility? How can this model be used to project future volatility? How does the Black-Scholes-Merton model help create valuation for options?

Reference no: EM131197654

Questions Cloud

According to the basic fcf stock valuation model : According to the basic FCF stock valuation model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock. The free cash flow valuation model cannot be used unless a company doesn't..
Trade balance-interest rates-exchange rates are related : Explain how trade balance, interest rates, and exchange rates are related, and cite an example of how a rise or fall in one changes the others. Does a deficit in China or the US change the overall advantage or disadvantage of trade? Why? Explore how ..
What happened to bring about this crisis : Financial crises happen in various parts of the world. There have been many to which you can reference. Discuss the impact of financial crisis in Europe during the 2010 timeframe. What happened to bring about this crisis? What lessons can be learned ..
Financial scandals on investors asset preferences : Discuss the impact of major accounting/financial scandals on investors’ asset preferences. In your opinion how do the scandals affect foreign markets? Discuss two macro variables that affect changes in interest rates/or markets. If you watch these va..
What is the primary purpose of the black-scholes-merton : What is the primary purpose of the Black-Scholes-Merton? How can historical data be used to identify risk? Volatility? How can this model be used to project future volatility? How does the Black-Scholes-Merton model help create valuation for options?
Expected future value of interest rate in risk-neutral world : “The expected future value of an interest rate in a risk-neutral world is greater than it is in the real world.” In your own words, what does this statement imply about the market price of risk for (a) an interest rate and (b) a bond price? Do you th..
Role of swot analysis in determining firm objectives : Explain what is meant by David Packard's quote "Marketing is far too important to leave to the marketing department". Explain the role of SWOT analysis in determining a firm's objectives or goals.
Forward contracts to hedge corporation foreign exchange risk : A treasurer of a corporation is trying to choose between options and forward contracts to hedge the corporation’s foreign exchange risk. Discuss what options you would take if you were the treasurer. Discuss the advantages and disadvantages of each a..
Maximize pofit given the labo rand material constraints : Stoneware pottery company wants to determine how many bowls and mug should be produced per day in orde to maximize pofit given the labo rand material constraints. The unit profit value for bowls is $40 per unit, for mugs the unit profit value is $50 ..

Reviews

Write a Review

Business Economics Questions & Answers

  What is the new value of the payment to capital

What is the total payment to capital in the manufacturing sector? What is the total revenue (price x quantity) of the agricultural sector? Suppose that the price of the manufactured good rises by 20% with no change in the price of the agricultural go..

  Ethics in practice case

Should those who labeled the product pink slime and questioned it unfairly be disciplined in any way? Or, is this just an example of the market at work and nothing should be done? What should Roth and his company do now? What further action should th..

  Market relates to the relative price elasticities of demand

Can you say anything about how the price charged in each market relates to the relative price elasticities of demand you calculated in part d? Try to explain intuitively using an example of a real product that you might consume, in which the supplier..

  Determine the number of our devoted to work and leisure

Suppose that trade off between work N and leisure L for a constant level of utility of 200 is expressed as u(n, L) = NL or 200= NL the budget constraint is l =24-w/P)N for a wage rate of w/P=4 determine the number of our devoted to work and leisure

  Explain how this event may affect the price of gasoline

During the past year, gasoline prices have been very volatile. One reason given for at least some of the volatility is the threat of war between Israel and Iran. More recently, there has been a report of serious fire damage to Venezuela's largest ref..

  Draw and explain a production possibilities frontier

Draw and explain a production possibilities frontier for an economy that produces milk and cookies. What happens to this frontier if disease kills half of the economys cow population.

  What should happen to the share price

In terms of the shareholder wealth maximization model, if the expected future profits of a firm are cut in half, what should happen to the share price?

  Demand elasticity facing one firm at competitive equilibrium

If the market demand curve is Q = 100-p, what is the market price elasticity of demand? If the supply curve of individual firm is q = p and there are 50 identical firms in the market, draw the residual demand facing any one firm. What is the residual..

  Competitive market-the quantity of a product produced

In a competitive market, the quantity of a product produced and the price of the product are determined by A. sellers. B. buyers. C. both buyers and sellers. D. None of the above is correct.

  How an abundance of exploitable resources

The story of Coltan in the Congo is just one example of how an abundance of exploitable resources can often worsen or prolong military conflicts in nations that are too poor of ineffectively governed to protect these resources.

  Average fixed cost of producing

What is the average fixed cost of producing 4 units of output and What is the marginal cost of producing the third unit of output.

  Economic factors might be behind this conventional wisdom

ture capitalists provide funds to finance new companies (start-ups), usually in return for a share of the firm’s initial profits (if any). Of course, venture capitalists look to back experienced entrepreneurs with strong products (or at least product..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd