Session 22 (Val MBAs): Introduction to options
from Aswath Damodaran Hosted by Aswath Damodaran
After we got the third quiz done, we moved on to looking at real options in corporate finance and valuation. We started by looking at the basic option pricing models, and the ingredients that make for real option applications - that there be an option at play (with an underling asset and contingent cash flows), that the option have significant economic value (and the importance of exclusivity) and that the conditions for option pricing model hold (that the asset and the option be traded…). While we did not get much of a chance to apply these tests, we will use them next session to look at different real option applications.Slides: https://pages.stern.nyu.edu/~adamodar/podcasts/valspr24/session22slides.pdfPost class test: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Ftest.pdfPost class test solution: https://pages.stern.nyu.edu/~adamodar/pdfiles/eqnotes/postclass/session22Fsoln.pdf
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