Black-Scholes Option Pricing Model
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Black-Scholes Option Pricing Model (alternatively known as OPM) is the model that is derived from the concept of a riskless hedge, this model calculates the value of an option as the difference between the expected PV of the terminal stock price and the PV of the exercise price.
Definitions
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Black-Scholes Option Pricing Model (OPM). Derived from the concept of a riskless hedge, this model calculates the value of an option as the difference between the expected PV of the terminal stock price and the PV of the exercise price.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
