67 224
Assignments Done
99,2%
Successfully Done
In November 2018

Answer to Question #68127 in Finance for Simon

Question #68127
Discuss the development & importance of the option pricing theory?
Expert's answer
Option pricing theory is the theory of how options are valued in the market. The Black-Scholes model is the most common option pricing theory.
The basic mission of option pricing theory is to calculate the probability that an option will expire in the money. To do this, the Black-Scholes model looks beyond the simple fact that the value of a call option increases when the underlying stock price increases or when the exercise price decreases.
Reference:
http://www.investinganswers.com/financial-dictionary/options-derivatives/option-pricing-theory-5094

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

Submit
Privacy policy Terms and Conditions