Business Valuation 105 – Contingent Methods of Valuation

The Black and Scholes option pricing theory (OPT) offers a clue as to how the equity in a firm may be valued. Suppose we recognise the fact, that an equity investor in a geared firm with limited liability has a call option on the underlying assets of the firm. In that case, we have, potentially, a method for valuing the business.   Conceptually thisContinue reading “Business Valuation 105 – Contingent Methods of Valuation”