ACCA P4 Share Options and Option Pricing part 1

 View all ACCA Paper P4 lectures >> This P4 lecture is based on OpenTuition course notes view/download here>>

1. says

John you are God sent! what will we do without you and opentuition?!

Thank you so much for teaching me how to get more value using a scientific calculator!

2. says

This is invaluable! I have a scientific calculator and i had no idea how all this buttons worked ln and e* now you have educated me on the standard normal distribution table! whew u saved me a head ache. for a while there when i saw the formulae i imagened it must be some enginering formulae forgotten on P4 paper by error!

It means this paper should have more calculations and less writing , how then are we expected to mix the two?! I mean just one question on options is enough to give one a head ache. God have mercy on us!

But Thank God for Opentuition iam confident iam finalising and passing this June 2013 exams. Watch this space i will update u all. John you are our guardian angel!

3. says

Example 4. When the lecturer was doing the call option formula, he made a mistake and put t=.4 when it should be .25… so answer is actually 4cents and not 5cents…. whew

4. says

Thank you very much for an invaluable lecture! You are brilliant, concise and straight to the point! Really appreciate the assistance.

5. says

You do help clarify all these complicated issues.
Thank you for all ur effort.
Benefit a lot

6. says

please verify that on the last question,the “T” you used is annual and not adjusted for 3 months as it should be 0.25 and not 0.4.

• says

@dladla, You are correct – sorry. I used the correct T for calculating d1 and d2, but then made a mistake in the equation for c.

You can see the correct answer at the back of the Course Notes.

7. says

Isn’t it possible to incorporate video speed controls within the player? It would really help since some may never have enough time to watch at the normal speed. I would request you to consider takling to the company providing the streaming and update if possible.

Thank you.

8. says

my calculator isgivig wrong answer on the In(pa/pe) maybe im getting it wrong. whos is there to help me???

9. says

thanks a lot…i didnt look at the answer in the notes just checked my answer against the video 😀 thanks a lot

10. says

You are correct that it is e^-0.025, but that is what is in the answer to example 5 in the notes. I think the answer is correct.

11. says

Also, thanks everything for putting these valuable lectures online, is even better and more thorough than Kaplan!! 😀

12. says

i think the example 5 is wrong when working the call & put option, my e^-rt is actually e^-0.1*0.25; i.e. e^-0.025 or have i missed something? thanks

• says

It seems the tutor made an error in the lecture (example 5 around 53:01) where he says the ‘t’ in e^-rt is 0.4 instead of 0.25 (3months).

But if you look at page 144 in the OT notes, the answer to example 5 in chapter 13 (share options and option pricing) shows the correct figure, t = 0.25.

Brilliant lecture, I’ve picked up a lot more from here than I did in class! Thank you!