Option Pricing and Applications in Capital Budgeting and Corporate Finance

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• In this course, we'll look at the elemental features of basic call and put options and identify the factors which are the key determinants of option values.

• We'll also look at the characteristics and methodology used to estimate option values: Black-Scholes and binomial option pricing models.

• In this course, we'll also define the term "real option" and draw decision trees to represent alternative decisions and potential outcomes in an uncertain economy and describe three types of real options"timing, growth, and abandonment"and explain why it is important to consider those options when evaluating projects.

• We'll explain how an investment for which a negative NPV is projected can have a positive NPV once any embedded real options are properly included in the evaluation as well as describe other methodologies businesses sometimes use to decide among investment projects: Equivalent Annual Benefit, Profitability Index and Hurdle Rate.

• We'll wrap up the course with a look at the option equivalents of corporate securities and explain how any insights obtained can be used in determining optimal investing or issuance strategies.

This course is part 4 of the New York Institute of Finance's Corporate Finance & Valuation Methods Professional Certificate.

What you will learn

• Introduction to Option Contracts and Option Pricing
• Real Options
• Integrating Real Options with Net Present Value Analysis
• Real Options Applied to Capital Budgeting Decisions
• Option-Based Deconstruction of Corporate Securities

Skills you learn

• Finance
• Investments
• Decision Tree Learning
• Corporate Finance
• Capital Budgeting
• Corporate Security

Auto Summary

Dive into the world of finance with the "Option Pricing and Applications in Capital Budgeting and Corporate Finance" course offered by edX. This foundational-level course introduces learners to the essential principles of option pricing and its practical applications in capital budgeting and corporate finance. Guided by expert instructors, participants will explore key financial concepts that are crucial for making informed business decisions. This course is perfect for business and management enthusiasts looking to enhance their financial acumen. With flexible subscription options including Starter and Professional plans, learners can choose the one that best fits their needs. Although the course duration is not specified, it promises comprehensive coverage of the subject matter, ensuring you gain valuable insights into the financial domain. Ideal for beginners, this course provides a solid grounding in option pricing theories and their real-world applications in corporate finance, setting you on a path to financial proficiency. Join now and start your journey towards mastering finance with edX.