When valuing the premium the underlying security is just one of the several factors, whichcan determine the value of the option. With the help of calculating the impact and value of all the determinants, the price of an option more correctly represents its value.
This note analyzes the effects of various determinants on the cost of an option and introduces two versions that use options equivalents: the Black Scholes Option Pricing Model and the Binomial Option Pricing Model.
Publication Date: 08/12/2005
This is just an excerpt. This case is about Finance
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