Black-Scholes Option Pricing Model was developed in the 1970s as a way to generate a legitimate and accurate valuation model for stock prices based on specific circumstances in the market and the stock options. It is the creation of economists Myron Scholes and Fischer Black who aimed to better forecast call options at various times within the option life cycle (PBS, 2000). According to the research, "this work involved calculating a derivative to measure how the discount rate of a warrant varies with time and stock price" (ubash, 2012). Essentially, the formula is a method for analyzing and forecasting call and put options within specific market circumstances for individual stock options. It is often used in modern investing and trading for "calculating the premium of an option" (Investopedia, 2013). Since its inception, the formula has become a powerful tool that greatly strengthens the ability of investors to forecast just the…...

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References

Investopedia. (2013). Options pricing: Black-Scholes Model. Active Trading. Web.  http://www.investopedia.com/ university/options-pricing/black-scholes-model.asp

PBS. (2000). The formula that shook the world. NOVA Online. Web.  http://www.pbs.org/wgbh/nova/stockmarket/formula.html 

Rubash, Kevin. (2012). A study of option pricing models. Bradley University. Web.  http://bradley.bradley.edu/~arr/bsm/model.html

Black-Scholes and Binomial Models
There are different variables that usually impact the pricing options. This paper will be based on the attributes of the two widely accepted models that are used for pricing options; Black-Scholes and the Binomial Models. These two models are based on the same theoretical assumptions and foundations like risk neutral valuation and geometric price Brownian motion theory of stock price behavior.

Option pricing theory has become among the most powerful tools in commerce and finance. The famous Black-Scholes equation is an effective model that is used for option pricing. It was named after those who pioneered it; Black, Scholes and Merton who brought it up in 1973 and won a Nobel Prize economics in 19097 for discovering it. When we look at it mathematically we can say that it is a final value problem for a second order parabolic equation. In this case an option is a contract…...

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References

Chance, D. (1998). A Synthesis of Binomial Option Pricing iVIodels for Lognormaiiy

Distributed Assets.

Chung, S. & Shih, P. (2007). Generalized Cox-Ross-Rubinstein Binomial Models

Macbeth, J, & Merville, L. (1979). An empirical Examination of the Black-Scholes call option pricing model.

Pricing Management
Determinants of Pricing Strategies

In pricing a new, specialized electronic product, the product development, engineering, marketing, accounting and finance teams internally will rely on internal and external factors to initially set the price. Pricing objectives and the frameworks they require will determine the internal factors included and excluded from the long-term pricing strategy overall (Avlonitis, Indounas, 2005). The intent of this analysis is to evaluate the other internal factors that will affect the pricing of a new, specialized electronic product.

Analysis of Internal Factors Affecting Pricing

ased on personal experience managing high technology products and from anecdotal interviews with members of product marketing teams in high technology businesses, the decision of whether to choose a value-based vs. cost-based approach to pricing is foundational to how many other internal factors affect price (Wagner, 1981). Value-based pricing will have a direct effect on the price elasticity of demand for a given product (Michalakelis, Dede,…...

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Bibliography

Avlonitis, G.J. & Indounas, K.A. 2005, "Pricing objectives and pricing methods in the services sector," The Journal of Services Marketing, vol. 19, no. 1, pp. 47-57.

Casey, M.P. 1985, "International Transfer Pricing," Management Accounting, vol. 67, no. 4, pp. 31.

Lucke, D., Philipp, J.H.S. & Schumacher, D. 2005, "A Note on R&D and Price Elasticity of Demand," Jahrbucher fur Nationalokonomie und Statistik, vol. 225, no. 6, pp. 688-698.

Michalakelis, C., Dede, G., Varoutas, D. & Sphicopoulos, T. 2010, "Estimating diffusion and price elasticity with application to telecommunications," Netnomics: Economic Research and Electronic Networking, vol. 11, no. 3, pp. 221-242.

Pricing Water From a Utility Perspective
Water is usually a scarce commodity but not in all situations, such as in Virginia, which is characterized by plentiful ground water supply. However, the relevant agencies in this state incur costs relating to drilling and pumping water from the ground, procurement and infrastructure costs. Because of this, pricing of water has become an important factor in water management. For utility companies in Virginia and other states, selling the water at the appropriate price is increasingly important since low costs do not cover operational costs, whereas high costs contribute to inadequate sales. The determination of the most suitable pricing model or scheme requires critical evaluation from a utility perspective and whether this commodity is affected by the same principles of economics as other goods and services or utilities.

Price Sensitivity of Water

From a utility perspective, water has seemingly weak price sensitivity as compared to other commodities…...

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References

Gaudin, Sylvestre, Ronald C. Griffin, and Robin C. Sickles (2001). Demand Specification for Municipal Water Management: Evaluation of the Stone Geary Form. Land Economics, 77(3), 399-422.

Gaudin, S. (2007, February 2). Effect of Price Information of Residential Water Demand.Applied Economics, 38(4), 383-393.

Gaudin, S. (2004, March).Transparent Prices for Municipal Water: Impact of Pricing and Billing Practices on Residential Water Use. Retrieved from Department of Economics -- Oberlin College website: https://new.oberlin.edu/dotAsset/96202.pdf

Howe, C.W. & Linaweaver, F.P. (1967).The Impact of Price on Residential Water Demand and Its Relation to System Design and Price Structure.Water Resources Research, 3(1), 13-32.

From a supply chain standpoint, pricing departments must also create a high level of communication and collaboration across a business as well. Their role is to be the orchestrators of internal effort to manage suppliers to pricing and margin levels, ensuring consistency and focus on share goals. This is one of the primary reasons pricing has now become a strategic initiative within many businesses. For change to occur in how companies do their pricing strategies, it often takes a senior executive to manage the change in processes and systems to ensure pricing becomes strategy and shifts away from being tactical in focus (Marn, oegner, Zawada, 26).
From the sell-side or the distribution and selling channels standpoint, pricing has never been more critically important to a company's profitability. The continued consolidation of industries and commoditization of products making tracking pricing elasticity by product category critical, especially when they are sold through…...

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References

Manu Carricano, Jean-Francois Trinquecoste, and Juan-Antonio Mondejar. "The rise of the pricing function: origins and perspectives. " the Journal of Product and Brand Management 19.7 (2010): 468.

Thomas H. Davenport. "Make Better Decisions. " Harvard Business Review 1 Nov. 2009

Vrinda Kadiyali, Pradeep Chintagunta, and Naufel Vilcassim. "Manufacturer-retailer channel interactions and implications for channel power: An empirical investigation of pricing in a local market. " Marketing Science 19.2 (2000): 127.

Krishna, a., F. Feinberg, and Z. Zhang. "Should Price Increases Be Targeted?-Pricing Power and Selective vs. Across-the-Board Price Increases. " Management Science 53.9 (2007): 1407-1422.

Value-based pricing is critically important in B2B marketing and selling scenarios as well, as the value delivered by enterprise software for example determines the percentage of maintenance paid every year (Hinterhuber, 2004). These maintenance payments yearly form the foundation of Oracle Corporations;' viability, in addition to many hundreds of other enterprise software companies. As a result of the critical role of value-based pricing in market positioning, companies have created pricing and revenue management enforcement strategies (oll, 2009) to ensure their resellers, channel partners, dealers and service organizations do not price below the minimum threshold and I so doing erode the market position as defined by the premium price.
Summary

Studies indicate that to the extent a company can successfully manage and fine tune value-based pricing over time is the extent to which they can experience revenue and profit growth even in the middle of a recession (Garrow, Ferguson, 2009). Value-based pricing…...

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References

Dunleavy, H., and G. Phillips. 2009. The future of airline revenue management. Journal of Revenue and Pricing Management: Special Issue: 'AGIFORS Conference' 8, no. 4, (August 1): 388-395.

Garrow, L., and M. Ferguson. 2009. Staying ahead of the curve: Using revenue management to help survive an economic downturn. Journal of Revenue and Pricing Management: Special Issue: Distribution and Revenue Management 8, no. 2-3, (March 1): 279-286.

Andreas Hinterhuber. 2004. Towards value-based pricing - An integrative framework for decision making. Industrial Marketing Management 33, no. 8, (November 1): 765-778.

Michael V Marn, Eric V Roegner, and Craig C. Zawada. 2003. The power of pricing. The McKinsey Quarterly no. 1, (January 1): 26-39.

Finance
Any Asset Pricing Theory forms the basic foundation of finance theory, in that it deals with the value of any asset under unknown or uncertain circumstances. The relationship between an asset and its price is the mainstay of the asset pricing theory: the lower the price, the poorer the expected performance. The Arbitrage Pricing Theory derives from this theory. The basic idea in the APT theory is that any sort of risk in asset returns must not affect the pricing of the asset in any way; it must depend on the covariance of assets with the risk factors. (Bayesian Approach of the Arbitrage Pricing Theory) The APT originated from Stephen oss, 1976-1978. oss had used a statistical procedure for assets returns, with the belief that there are in existence no arbitrage probabilities. The APT must of necessity involve a lot of risk taking processes, (Definition of Arbitrage Pricing Theory.)

While CAPM,…...

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References

An Introduction to Investment Theory" Retrieved at   Accessed on 29 July, 2004http://viking.som.yale.edu/will/finman540/classnotes/class6.html .

Bayesian Approach of the Arbitrage Pricing Theory" Retrieved at   on 29 July, 2004http://64.233.167.104/search?q=cache:Sa6l536IAccessed 

Capital Asset Pricing Model" Retrieved at   Accessed on 29 July, 2004http://www.investorwords.com/698/Capital_Asset_Pricing_Model.html .

Definition of Arbitrage Pricing Theory" Retrieved at   on 29 July, 2004http://economics.about.com/cs/economicsglossary/g/apt.htm?terms=economic+theoryAccessed 

Executive summaryThe Capital Asset Pricing Model (CAPM) is considered a pivotal model in the computation of investment risk and the expected return on the investment. CAPM provides a way of ascertaining the expected return for stocks and estimating the required return. The single-index model (SIM) also aids in measuring the return and risk of a stock. It assumes that there is only one macroeconomic factor that brings about systematic risk influencing all stock returns. The APT model proposes that the return on financial security has a linear relationship with H systematic risk factors. The assertion made is that investors want to be given compensation for all of the risk factors that have a systematic impact on a security return. The Fama-French (FF) three-factor model divides the fundamental factors into three factors comprising the value factor, market factor, and scale factor for a more improved expounding influence of excess return. The…...

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ReferencesAbildtrup, J., Helles, F., Holten-Andersen, P., Larsen, J. F., & Thorsen, B. J. (Eds.). (2012). Modern time series analysis in forest products markets (Vol. 58). Springer Science & Business Media.Boccadoro, C. (2014). Morningstar\\\\\\\\\\\\\\\'s Risk-Adjusted Return Measure. Mutual Fund Observer. Retrieved from:   Z., Kane, A., Marcus, A. J. (2014). Investments. New York: McGraw-Hill.Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice. New York: Cengage Learning.Fabozzi, F. J. (2015). Capital markets: institutions, instruments, and risk management. New York: MIT Press.Fama, E. F., & French, K. R. (2012). Size, value, and momentum in international stock returns. Journal of financial economics, 105(3), 457-472.Fama, E., & French, K. (2015). A five-factor asset pricing model. Journal of Financial Economics, 116, 1-22.Feibel, B. J. (2003). Investment performance measurement (Vol. 116). Hoboken: John Wiley & Sons.Focardi, S. M., & Fabozzi, F. J. (2004). The mathematics of financial modeling and investment management (Vol. 138). Hoboken: John Wiley & Sons.Karp, A., & van Vuuren, G. (2017). The Capital Asset Pricing Model and Fama-French three-factor model in an emerging market environment. International Business & Economics Research Journal (IBER), 16(4), 231-256.Laopodis, N., & Laopodis, N. T. (2012). Understanding investments: Theories and strategies. New York: Routledge.Levy, H. (2011). The capital asset pricing model in the 21st Century: Analytical, empirical, and behavioral perspectives. Cambridge University Press.Morningstar. (2020). Morningstar Risk-Adjusted Return. Retrieved from:  https://admainnew.morningstar.com/directhelp/Glossary/Risk_and_Rating/Morningstar_Risk-Adjusted_Return.htm Tarantino, A. (2010). Essentials of risk management in finance (Vol. 53). Hoboken: John Wiley & Sons.14https://www.mutualfundobserver.com/2014/03/morningstars-risk-adjusted-return-measure/ Bodie,

Table 2, elationships in MNSC problem provide an analysis of these factors in the form of a decision matrix of transfer prices, transport cost allocations and trade quantities from an import and expert standpoint (Villegas, Ouenniche, 2008).
This is one of the more useful aspects of this article, in that it extrapolates the near-term decisions of transfer pricing systems directly and materially into the financial reporting of the firm in the same fiscal period. There is also the quantification of the MNSC purely from the effects of cross-supplier and supplier-buyer collaboration which gets much coverage in the industry press, yet lacks the quantification from a financial standpoint this article provides. The quantification of MNSC-based decisions purely on transfer pricing that is market-based leads to higher levels of volatility and uncertainty of earnings yet also gives firms a great control over the competitiveness of fulfilling their own demand over time. The…...

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References

Villegas, F., and J. Ouenniche. 2008. A general unconstrained model for transfer pricing in multinational supply chains. European Journal of Operational Research 187, no. 3, (June 16): 829.

Corporate Finance
s explained by Professor Watkins at San Jose State University, the binomial option pricing model is when a stock price over some period is presumed to go up by a certain percent or down by a certain percent. This leads to a formula whereby the current stock price is multiplied times one plus the percentage it could go down and then the same formula is done for the percentage it could go up. If a call option is in play or if the stock has interest that is risk-free, then the formula gets a little more complex (Watkins, 2014). Risk-neutral option pricing relies on something known as arbitrage. In this instance, all future outcomes are adjusted for risk and the expected asset values that results are calculated thusly. Once that is done, every asset can be priced accordingly. This is not the same thing as true real-world risk but…...

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As with other parts of doing business and the wants of all the stakeholders and investors involved, the agency problem is when the differing objectives and desired outcomes of the stakeholders and investors lead to business decisions that fail to properly and sufficiently maximize value. Not unlike situations where money is tugged between dividend payments and more investing in the business, an agency problem creates issues with mergers as the price a business is sold or bought for has a major effect on the motives and perspectives of the people involved. One academic theory that relates to this subject points out that perceived or stated value up front before a merger is approved and executed can differ greatly from the verifiable or perceived value found after the fact. Further, it is shown that managerial behavior by bidding companies is promoting of mergers that are excessive and managerial behavior in target firms tends to manifest in the opposite way. In short, the collusion and behavior of buying and selling firms leads to an improper price being paid for a firm and this can be either a boon or a bust for the buying firm (Caves, 1989).

Caves, R. (1989). Mergers, takeovers, and economic efficiency: Foresight vs. hindsight.

International Journal of Industrial Organization, 7(1), 151-174.

economics pricing system that allows smaller practices and organizations to buy and sell affordable prices is a must today. The use of technology to determine pricing strategys is prevalent in todays times. This can be illustrated with the following examples where companies have used technology to formulate their pricing strategy.
The pricing model for MDoffice offers an affordable entry price for smaller, less-demanding medical offices such as solo practitioners. These practices can extend their investment in MDoffice by easily moving from standalone PC's or laptops, to peer-to-peer networks, to sophisticated client/server installations involving LANs (Local Area Networks) and perhaps ANs (ide Area Networks). This easy migration from platform to platform can be accomplished in affordable increments.

The overall objective in all our pricing decisions is to offer great products at a fair price allowing our clients to get an excellent return on their investment and to have an affordable growth and upgrade…...

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Works Cited

 http://www.mdbase.com/flash/strategies.htm#Pricing%20Strategy 

Economics for Business" by John Sloman and Mark Sutcliffe - Prentice Hall - ISBN 0-273-65187-0

PICE ANALYSIS Pricing Strategy Analysis: New Line of Coffee-Flavored Energy Drinks by ed Bulled Bull is introducing a new line of coffee-flavored energy drinks into the market. The product and place analyses carried out by the marketing team have all yielded positive feedback, and the company wishes to do a price analysis to complete the four Ps of the marketing mix. The price set will dictate how the new product line performs in the market. If the price is too high, it could affect sales given the level of market competition, while if it is low, it could eat into the companys profits, thus threatening its sustainability.ed Bulls Pricing Strategy in elation to the Competitioned Bull is a market leader in the energy drink market. Its closest competitors in the US include Monster, ockstar, CELSIUS, and the Starbucks Energy Drink. A quick price comparison of the ed Bull Energy drink…...

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References Curtis, V. (2015). Business planning essentials for dummies. John Wiley & Sons. Datta, D. (2017). Managerial economics. PHI Learning. Simon, H. (2015). Confessions of the pricing man: How price affects everything. Springer.  https://www.walmart.com/search?q=redbull+  https://www.walmart.com/search?q=rockstar  https://www.walmart.com/search?q=monster%20energy%20drink

IntroductionThe pricing model for telemedicine has yet to be standardized as the industry is just being to burgeon. As a result, many competitors use various pricing model that depend heavily on their business models. For startup with large amounts of cash and financial backing, many are willing to charge much lower profits in order to generate loyal and entrenched followers. Many technology-based companies such as Amazon and Microsoft followed this strategy during their start up phases. Amazon for example, generated substantial loses for a majority of its existence as it looked to generate a lower customer following while also building out its product offerings. Microsoft used the same tactic in order to become the dominate word processing software. Once it became dominate, it then was able to charge higher prices and add additional services. Pricing for startup telemedicine organizations look to be employing the same technique. This can very disruptive,…...

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References:1. David U. Himmelstein, et al., “A Comparison of Hospital Administrative Costs in Eight Nations: US Costs Exceed All Others By Far.” Health Affairs 33 no. 9 (2014): 1586-1594. Available at 2. Gerard F. Anderson, et al., “It’s the Prices Stupid: Why the U.S. Is So Different from Other Countries.” Health Affairs 22 no. 3 (2003): 89-1053. Matthew B. Frank, et al. “The Impact of a Tiered Network on Hospital Choice,” Health Services Research, forthcoming at  http://www.hsr.org  (2015)http://content.healthaffairs.org/content/33/9/1586.full.html.

For example, if the Fed sees inflation as a risk going forward, the market will place a weighting on that statement, allocating some form of increased interest rate to the future cash flows.
At the time of course, the exact implications of the Fed's comments are unknown. They imply that rates may move in one direction or another, but they are not an actual movement and the Fed reserves the right to change its mind before it meets again. The bond market is thus working with imperfect information. This can lead to general price movements but of unknown quantity. Over time, a reasonable correlation can be established, such as the elasticity of bond prices in relation to, for example, strong warnings from the Fed about inflation. Such a correlation can be drawn with a large enough sample size that it can be used in bond prices.

Overall, though, the exercise still…...

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Works Cited:

No author. (2009). Advanced Bond Concepts: Bond Pricing. Investopedia. Retrieved April 29, 2009 from  http://www.investopedia.com/ university/advancedbond/advancedbond2.asp

No author. (2009). The Grand Illusion. The Economist. Retrieved April 29, 2009 from  http://www.economist.com/finance/displaystory.cfm?story_id=13240822 

Heakal, Reem. (2009). Forces Behind Interest Rates. Investopedia. Retrieved April 29, 2009 from

Jet Blue Case StudyWill the new revenue standard provide more decision-useful information than prior U.S. GAAP?Generally speaking, revenue recognition is the process of recording revenue in a company\\\'s accounting records. However, there are different ways to approach revenue recognition, and each perspective may slightly alter the way that revenue is recorded. For example, the cash basis approach simply records revenue when cash is received, regardless of when the product or service was actually sold. The accrual basis approach, on the other hand, records revenue when the sale is made, even if cash has not yet been received. There are also hybrid approaches that combine elements of both cash and accrual basis accounting. Ultimately, the most important thing is to be consistent in your accounting methods so that your financial statements accurately reflect the financial health of your business. With that said, there are some important points to consider in the…...

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ReferencesBooth, E., Blankespoor, E., & Foroughi, J. (2017). Jet Blue and the New Revenue Recognition Standard. Stanford Business.Deloitte. (2021). On the radar: Revenue recognition. KPMG. (2019). Revenue. IFRS 15 Handbook.

Delivery Process Outline Differences between USPS and Other Courier Services

The United States Postal Service (USPS) and private courier services like FedEx, UPS, and DHL operate under distinct delivery process outlines that impact their service offerings, efficiency, and cost structures. Here are the key differences between the USPS and other courier services:

1. Delivery Infrastructure:

USPS: The USPS possesses an extensive network of post offices, distribution centers, and dedicated delivery routes that span the entire United States. This vast infrastructure allows the USPS to deliver to every address in the country, including remote and underserved areas.
Courier Services: Private courier services typically....

Cloud Computing's Impact on e-Learning and e-Teaching in South African Schools Post-COVID-19
Introduction:
The post-COVID-19 era has witnessed a significant surge in the adoption of cloud computing in education. South African schools have embraced cloud-based solutions to enhance e-learning and e-teaching, transforming the educational landscape.
Accessibility and Flexibility:
Cloud-based platforms provide seamless access to educational resources anytime, anywhere. Students can access lessons, assignments, and educational tools remotely, eliminating geographic barriers and enabling flexible learning. This flexibility allows students to balance their studies with other commitments, such as extracurricular activities or work.
Enhanced Collaboration:
Cloud computing fosters collaboration between students and teachers. Shared online workspaces facilitate group....

1. The evolution of the subscription-based business model in the digital age
2. The impact of e-commerce on traditional brick-and-mortar business models
3. How data-driven business models are transforming industries
4. The role of social responsibility in modern business models
5. The rise of gig economy platforms and their impact on traditional employment models
6. The future of the sharing economy and its implications for traditional business models
7. The intersection of technology and sustainability in shaping new business models
8. The role of artificial intelligence in revolutionizing business models
9. The challenges and opportunities of platform-based business models
10. The importance of customer-centric business models in the age....

Successful entrepreneurs often take an innovative approach to differentiate themselves in the market by focusing on the following strategies:

1. Unique value proposition: Successful entrepreneurs identify a specific need or problem in the market and offer a unique solution that sets them apart from competitors. This could be a new product or service, a different pricing model, or a more convenient or efficient delivery method.

2. Customer-centric approach: Entrepreneurs who prioritize customer needs and preferences are more likely to succeed. By listening to customer feedback, addressing pain points, and delivering exceptional customer service, entrepreneurs can build strong relationships and differentiate themselves from....