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questforknowledge says

John i have this question. it concerns calculatind d1 if a questions is given n i calculate d1 and a figure say 1.2812 and i then round it to 1.28 and another candidate calculates his and round it to 1.3. these two answers will give different values for N(d1) which will lead to a different value for a call option. will the two of us have all the marks. I am asking because when calculating the figure for natual log of Pa/Pe due to rounding candidates will have different answers

thank you

John Moffat says

Two things.

Firstly most if not all of the marks are for proving you understand what is happening rather than for the final answer.

Secondly, when rounding you should really round to the number of decimals needed for the tables, so why round to 1.3 when the tables allow you to look up 1.28

mustafabilalqari says

How can I Have Lectures of Business Valuation

John Moffat says

There are no lectures yet on business valuation.

ALI says

How can i download this?or this is only for watching?

John Moffat says

I am sorry, but you can only download the course notes – the lectures can only be watched online.

It is the only way that we can keep this website free of charge.

ALI says

Can u provide me solution of paper strategic financial management 3.7 of december 2006 of ACCA………?

John Moffat says

I don’t think that I have it any longer – I will check later.

Do remember that the examiner (and the syllabus) has changed twice since then.

ALI says

okk,,,..

NEENA says

sir in example you taken t as 0.4 in formula of call option and put option i guess thats a mistake it should be 0.25 right?

NEENA says

i mean example 5.

John Moffat says

I have watched my lecture again, and it seems that I have taken ‘t’ as 0.25 correctly (it is ‘s’ that is 0.4).

You can of course check the answer at the back of the Course Notes. I think it is correct.

Lidia says

Dear John, it seems when calculating ‘-rt’ in example 6 (52,48 minute of the lecture and so on) you’ve multiplied 0,1 (r) by 0,4 instead of 0,25 (t)….

John Moffat says

Ooops – you are correct.

Sorry

sakura69 says

Thanks John!

ruth12 says

These are very well explained lectures and are a great help. Thank you sir and Open Tuition.

toobaalvi says

I have a very basic ques.. But its really confusing me. why the value of option is share price – excercise price?

John Moffat says

If it was a call option exercisable immediately, then the option gives you the right to buy a share at a fixed price.

So, for example, if the current share price is $4.00 and you could buy an option giving you the right to buy the share at an exercise price of $3.70, then you could buy the share for $3.70 and immediately sell it for $0.30.

Nobody is going to give you that right free! You would be prepared to pay $0.30 for the option. Then you could use it and buy a share for $3.70. You have then spent $4.00 in total and you own a share worth $4.00

(But of course, that is only if the option were exercisable immediately. In practice the option will be the right to buy a share at a fixed price on a future date, and to get the value of that we need to use all the formulae.)

tinashe says

thank u!

tinashe says

thank you