The Use and Application of Option Pricing Modeling
BVR's Webinar Series
Thursday, December 16, 2010
12:00am-2:00am PT • 3:00am-5:00am ET
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The use and application of the Black Scholes Option Pricing Model in business valuation has come under increased scrutiny as of late. Since its inclusion in the AICPA's practice aid in 2004, critical examination and a deep economic downturn have drawn its use and appropriateness into question. Indeed, this model was the subject of rebutting articles in BVUpdate in January and March of 2010: "Does Black Scholes Overvalue Early Stage Company Allocations?" and "Lognormal Distributions vs. Empirical Observations – A Defense of the Option Pricing Method," respectively. In "The Use and Application of Option Pricing Modeling" James Walling and Scott Beauchene, each a co-author of these articles, joined BVR to discuss both how to appropriately utilize this valuation tool and its applicability in light of a practice aid update and a turbulent economy.
- Introduction: Reconciling the BVR articles and identify key concepts
- Black-Scholes: what you need to know about its underlying assumptions
- Identifying fact patterns best suited to the option model
- Practical application challenges and examples
- Introduction to alternative or adjusted models
- Refine and reinforce your understanding of Black-Scholes option model inputs in the context of share based compensation analysis
- Identify potential challenges and appropriate uses for the option model
- Learn about developing methodologies and enhancements that may improve existing models
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- Program Level: Advanced
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- Delivery Method: QAS Self-Study
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