• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

BSOP VC BSP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BSOP VC BSP

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 26, 2015 at 4:32 am #285334
    dragon76
    Member
    • Topics: 50
    • Replies: 77
    • ☆☆

    John,

    Pls. let me know whether any difference btw BSOP and BSP
    and why the Interest Risk free rate affect BSOP model

    Much thanks

    November 26, 2015 at 9:42 am #285393
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    BSOP is Black Scholes Option Pricing. BSP is not a standard abbreviation for anything to do with finance (I can only assume that you have seen someone use it as shorthand for BSOP!).
    (There is something known as the Binomial Option Pricing Model (BOPM) which is used for valuing american style options (Black Scholes is only for european style options) but this is not examinable in P4.)

    The interest rate is relevant because the term e^-rt in the formula is effectively discounting the exercise price over the time to maturity (it is continuous discounting rather than the yearly discounting that we usually do with NPV’s). It clearly makes a difference when the exercise price would be payable.

    November 26, 2015 at 10:04 am #285411
    dragon76
    Member
    • Topics: 50
    • Replies: 77
    • ☆☆

    Could you pls. clarify the meanings of ” Continuous discounting”?

    November 26, 2015 at 10:10 am #285415
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    Usually we assume cash flows arise at yearly intervals and discount for whole years.

    In practice most cash flows will arise continuously throughout the year and it would be more accurate to discount on a daily basis, or (obviously completely unrealistically) on a per second basis.

    Continuous discounting is assuming flows arise continuously throughout the year and not just at yearly intervals.

    (However, that is completely irrelevant for P4 except insofar as that is the reason for e^-rt )

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • John Moffat on Relevant Cash Flows for DCF Relevant Costs (example 1) – ACCA Financial Management (FM)
  • John Moffat on Accounting for Management – ACCA Management Accounting (MA)
  • Hsaini on Accounting for Management – ACCA Management Accounting (MA)
  • kennedyavege@2023 on Relevant Cash Flows for DCF Relevant Costs (example 1) – ACCA Financial Management (FM)
  • John Moffat on Relevant Cash Flows for DCF Relevant Costs (example 1) – ACCA Financial Management (FM)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in