<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@94260c1a966a41758f2b6927105e7dc2" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">Origins of Option Pricing Theory</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@video+block@486a8e54de954e97bea33151ea1821a7">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-block-type="video" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@video+block@486a8e54de954e97bea33151ea1821a7" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">Origins of Option Pricing Theory</h3>
<div
id="video_486a8e54de954e97bea33151ea1821a7"
class="video closed"
data-metadata='{"transcriptLanguages": {"en": "English"}, "captionDataDir": null, "autoAdvance": false, "poster": "https://mitx-edx-video-meta-storage.s3.amazonaws.com/media/video-images/98c9db0570994aa184bcc547901e0177.png?Expires=1714099526&Signature=95mVfrVChEYcjyuomc2HPYhY3hs%3D&x-amz-security-token=IQoJb3JpZ2luX2VjEGoaCXVzLWVhc3QtMSJGMEQCIFaKrWz96irBnnm%2BEQgCrxuuu%2BxkDTXqQnXDMOyoG5GJAiBijKrddAKAxp7X5DTg%2BwnHn4FvEi%2FH%2FJqPCwTmBcgvOCrDBQiz%2F%2F%2F%2F%2F%2F%2F%2F%2F%2F8BEAMaDDg1OTIwNTYzNzQxMSIMwK6uDE%2F25pBs2oLCKpcF%2BDEseF7oSKDuemTnrmZDM%2BwwqOtp62OWwijXZ3up6WzKbMs%2FCChsOzjuAefmo5XPHIQzIR98aWhPAB6zpTALNr2%2FYeuqkPIIAMX7eIjfgjJHC%2BwcrKSujq%2FJukelM4FQvN9j17nUSJthUdzg9fzIkjNcNY%2BUh6fZub8Sqrf2soynKEGFCyrf07ynu%2FRsuN2tg8htxlCuvNrdf%2BZvKcj%2BrPFU5z%2FHj6rAuvQlOrvzbTpOG8KV6i0xEr4Ug1eJ3yIl6Bo8KHZ8hLQ3ej9ZU0EA%2FsM0ZDy6UJLzm6HdUz1I%2Fwpnb5hUSDf%2Fwmz4myLu%2Fli7a7CjMwHKuk%2BYhlOnN2yuXT36HwH6GkbteUSPh0Kw8hv9IPfvDHZBD6XFTh76g%2Bo7%2FqzKkAftPLSJb3%2Fb9E2gvDaZxccpyWdft2cjYxanZkkHwV6XMkgnJ5NhNiwRDCzPV10OTEwzwMK2%2F3hYegw2p%2Baj%2Bt3jYh4vz%2B98nwfRTWTTLG%2B6v6PFAOrd9741ekod%2FRLDx9D8nlQIvDKSSnNj78K935ufWq5W8V4beeDL8%2FyToMJ5vsUgiQ7Y%2F%2Fg8buRRbE4w2M0siQRiW5g2wuxJ1IDRpDTU6lEwHhu1t9OvIuhQbSYUE%2BMNKbiFNU86xL1SFSb9mGXte4waBMYXb%2Fmty0VFbR206CpnCxm%2F4GmrGElmXgWdL0ek12ClIt9Au053j8r5no13ASd4hHcPndtI%2FFauokEb4TTVgKCGRUXkgVnxwqwLk0LoG7Lic%2FC9lZP1cZiZADnvrTvlcp1%2BeVsFTVN0bGQTKVmAdWHENuxHGTagYDHss47DoveG%2FXRFsq4gevNxSDWPd93jmrBQQA92Lru68DwJDO6AMqwr8%2Bc8c%2FVqEMyHt%2B9JMJiQrLEGOrIBeYIvb%2Fz%2F085nRtRGRgPijegafn0TIj%2FeZucU0f%2Fcbore%2Bz%2BhVaOC%2FKTT%2FFlxjTFwMZxC9kWakjADm03gPUYKVTqMTcwZO5nSRDbQ9x2TD9WlIDswZnVR3EJKAKxyaNqEOA9qZb0VmmecgSWmmukkVbEYQF851YXtH3%2BrDRnpxWryNaedCuU4wirDnFwuTiiQuI5GIICJBf%2FgAo%2BaHeUSSHBt7eEx8dbyLtyTI0unmW3bjA%3D%3D&AWSAccessKeyId=ASIA4QDFFSURVB5TURVM", "publishCompletionUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@486a8e54de954e97bea33151ea1821a7/handler/publish_completion", "transcriptLanguage": "en", "showCaptions": "true", "completionEnabled": false, "prioritizeHls": false, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007900_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007900/MITx15.482x-V007900.m3u8"], "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@486a8e54de954e97bea33151ea1821a7/handler/transcript/available_translations", "ytApiUrl": "https://www.youtube.com/iframe_api", "autohideHtml5": false, "start": 0.0, "generalSpeed": 1.0, "recordedYoutubeIsAvailable": true, "speed": null, "end": 0.0, "ytMetadataEndpoint": "", "savedVideoPosition": 0.0, "ytTestTimeout": 1500, "autoplay": false, "saveStateUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@486a8e54de954e97bea33151ea1821a7/handler/xmodule_handler/save_user_state", "saveStateEnabled": false, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@486a8e54de954e97bea33151ea1821a7/handler/transcript/translation/__lang__", "streams": "", "completionPercentage": 0.95, "duration": 362.92, "lmsRootURL": "https://openlearninglibrary.mit.edu"}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="486a8e54de954e97bea33151ea1821a7"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@9982942f3980447da88af01fd843d645" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">What is an Option?</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@video+block@b9830d05325a4889b264f2837e81fbe8">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-block-type="video" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@video+block@b9830d05325a4889b264f2837e81fbe8" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">What is an Option?</h3>
<div
id="video_b9830d05325a4889b264f2837e81fbe8"
class="video closed"
data-metadata='{"transcriptLanguages": {"en": "English"}, "captionDataDir": null, "autoAdvance": false, "poster": "https://mitx-edx-video-meta-storage.s3.amazonaws.com/media/video-images/d116fa07228a4e15b47afe4a29298a8a.png?Expires=1714099526&Signature=wdwcBWMhL4alONA8wNSLpbjVor8%3D&x-amz-security-token=IQoJb3JpZ2luX2VjEGoaCXVzLWVhc3QtMSJGMEQCIFaKrWz96irBnnm%2BEQgCrxuuu%2BxkDTXqQnXDMOyoG5GJAiBijKrddAKAxp7X5DTg%2BwnHn4FvEi%2FH%2FJqPCwTmBcgvOCrDBQiz%2F%2F%2F%2F%2F%2F%2F%2F%2F%2F8BEAMaDDg1OTIwNTYzNzQxMSIMwK6uDE%2F25pBs2oLCKpcF%2BDEseF7oSKDuemTnrmZDM%2BwwqOtp62OWwijXZ3up6WzKbMs%2FCChsOzjuAefmo5XPHIQzIR98aWhPAB6zpTALNr2%2FYeuqkPIIAMX7eIjfgjJHC%2BwcrKSujq%2FJukelM4FQvN9j17nUSJthUdzg9fzIkjNcNY%2BUh6fZub8Sqrf2soynKEGFCyrf07ynu%2FRsuN2tg8htxlCuvNrdf%2BZvKcj%2BrPFU5z%2FHj6rAuvQlOrvzbTpOG8KV6i0xEr4Ug1eJ3yIl6Bo8KHZ8hLQ3ej9ZU0EA%2FsM0ZDy6UJLzm6HdUz1I%2Fwpnb5hUSDf%2Fwmz4myLu%2Fli7a7CjMwHKuk%2BYhlOnN2yuXT36HwH6GkbteUSPh0Kw8hv9IPfvDHZBD6XFTh76g%2Bo7%2FqzKkAftPLSJb3%2Fb9E2gvDaZxccpyWdft2cjYxanZkkHwV6XMkgnJ5NhNiwRDCzPV10OTEwzwMK2%2F3hYegw2p%2Baj%2Bt3jYh4vz%2B98nwfRTWTTLG%2B6v6PFAOrd9741ekod%2FRLDx9D8nlQIvDKSSnNj78K935ufWq5W8V4beeDL8%2FyToMJ5vsUgiQ7Y%2F%2Fg8buRRbE4w2M0siQRiW5g2wuxJ1IDRpDTU6lEwHhu1t9OvIuhQbSYUE%2BMNKbiFNU86xL1SFSb9mGXte4waBMYXb%2Fmty0VFbR206CpnCxm%2F4GmrGElmXgWdL0ek12ClIt9Au053j8r5no13ASd4hHcPndtI%2FFauokEb4TTVgKCGRUXkgVnxwqwLk0LoG7Lic%2FC9lZP1cZiZADnvrTvlcp1%2BeVsFTVN0bGQTKVmAdWHENuxHGTagYDHss47DoveG%2FXRFsq4gevNxSDWPd93jmrBQQA92Lru68DwJDO6AMqwr8%2Bc8c%2FVqEMyHt%2B9JMJiQrLEGOrIBeYIvb%2Fz%2F085nRtRGRgPijegafn0TIj%2FeZucU0f%2Fcbore%2Bz%2BhVaOC%2FKTT%2FFlxjTFwMZxC9kWakjADm03gPUYKVTqMTcwZO5nSRDbQ9x2TD9WlIDswZnVR3EJKAKxyaNqEOA9qZb0VmmecgSWmmukkVbEYQF851YXtH3%2BrDRnpxWryNaedCuU4wirDnFwuTiiQuI5GIICJBf%2FgAo%2BaHeUSSHBt7eEx8dbyLtyTI0unmW3bjA%3D%3D&AWSAccessKeyId=ASIA4QDFFSURVB5TURVM", "publishCompletionUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@b9830d05325a4889b264f2837e81fbe8/handler/publish_completion", "transcriptLanguage": "en", "showCaptions": "true", "completionEnabled": false, "prioritizeHls": false, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V008000_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V008000/MITx15.482x-V008000.m3u8"], "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@b9830d05325a4889b264f2837e81fbe8/handler/transcript/available_translations", "ytApiUrl": "https://www.youtube.com/iframe_api", "autohideHtml5": false, "start": 0.0, "generalSpeed": 1.0, "recordedYoutubeIsAvailable": true, "speed": null, "end": 0.0, "ytMetadataEndpoint": "", "savedVideoPosition": 0.0, "ytTestTimeout": 1500, "autoplay": false, "saveStateUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@b9830d05325a4889b264f2837e81fbe8/handler/xmodule_handler/save_user_state", "saveStateEnabled": false, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@b9830d05325a4889b264f2837e81fbe8/handler/transcript/translation/__lang__", "streams": "", "completionPercentage": 0.95, "duration": 958.67, "lmsRootURL": "https://openlearninglibrary.mit.edu"}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="b9830d05325a4889b264f2837e81fbe8"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@e30e1b27c03f4341ae2ea04889b5e491" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">Exercise: What is an Option?</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@problem+block@8d02326ee5204b0087c34a539ff7f5e4">
<div class="xblock xblock-public_view xblock-public_view-problem xmodule_display xmodule_ProblemBlock" data-block-type="problem" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@problem+block@8d02326ee5204b0087c34a539ff7f5e4" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="True" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Problem"}
</script>
<div id="problem_8d02326ee5204b0087c34a539ff7f5e4" class="problems-wrapper" role="group"
aria-labelledby="8d02326ee5204b0087c34a539ff7f5e4-problem-title"
data-problem-id="block-v1:MITx+15.480x+3T2021+type@problem+block@8d02326ee5204b0087c34a539ff7f5e4" data-url="/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@problem+block@8d02326ee5204b0087c34a539ff7f5e4/handler/xmodule_handler"
data-problem-score="0.0"
data-problem-total-possible="3.0"
data-attempts-used="0"
data-content="
<h3 class="hd hd-3 problem-header" id="8d02326ee5204b0087c34a539ff7f5e4-problem-title" aria-describedby="block-v1:MITx+15.480x+3T2021+type@problem+block@8d02326ee5204b0087c34a539ff7f5e4-problem-progress" tabindex="-1">
Exercise: What is an Option?
</h3>
<div class="problem-progress" id="block-v1:MITx+15.480x+3T2021+type@problem+block@8d02326ee5204b0087c34a539ff7f5e4-problem-progress"></div>
<div class="problem">
<div>
<p>Imagine you are the CFO of ABC Pharmaceuticals, and you have just financed a Phase 3 clinical trial for a new migraine medication at a cost of $200 million. If the trial is successful, the market launch for the new therapy would cost $100 million, and would occur at the end of the clinical trial in 3 years.</p>
<ol>
<li>If we think of the possibility of launching the new therapy as an option, is it a call or a put?
<p><div class="wrapper-problem-response" tabindex="-1" aria-label="Question 1" role="group"><div class="choicegroup capa_inputtype" id="inputtype_8d02326ee5204b0087c34a539ff7f5e4_2_1">
<fieldset aria-describedby="status_8d02326ee5204b0087c34a539ff7f5e4_2_1">
<div class="field">
<input type="radio" name="input_8d02326ee5204b0087c34a539ff7f5e4_2_1" id="input_8d02326ee5204b0087c34a539ff7f5e4_2_1_choice_3" class="field-input input-radio" value="choice_3"/><label id="8d02326ee5204b0087c34a539ff7f5e4_2_1-choice_3-label" for="input_8d02326ee5204b0087c34a539ff7f5e4_2_1_choice_3" class="response-label field-label label-inline" aria-describedby="status_8d02326ee5204b0087c34a539ff7f5e4_2_1"> <text>Call option</text>
</label>
</div>
<div class="field">
<input type="radio" name="input_8d02326ee5204b0087c34a539ff7f5e4_2_1" id="input_8d02326ee5204b0087c34a539ff7f5e4_2_1_choice_4" class="field-input input-radio" value="choice_4"/><label id="8d02326ee5204b0087c34a539ff7f5e4_2_1-choice_4-label" for="input_8d02326ee5204b0087c34a539ff7f5e4_2_1_choice_4" class="response-label field-label label-inline" aria-describedby="status_8d02326ee5204b0087c34a539ff7f5e4_2_1"> <text>Put option</text>
</label>
</div>
<span id="answer_8d02326ee5204b0087c34a539ff7f5e4_2_1"/>
</fieldset>
<div class="indicator-container">
<span class="status unanswered" id="status_8d02326ee5204b0087c34a539ff7f5e4_2_1" data-tooltip="Not yet answered.">
<span class="sr">unanswered</span><span class="status-icon" aria-hidden="true"/>
</span>
</div>
</div></div></p></li>
<li>
What is its strike price? (<i>Note</i>: Your answer should be expressed in units of millions of dollars.)
<p><p style="display:inline">$</p><div class="inline" tabindex="-1" aria-label="Question 2" role="group"><div id="inputtype_8d02326ee5204b0087c34a539ff7f5e4_3_1" class=" capa_inputtype inline textline">
<div class="unanswered inline">
<input type="text" name="input_8d02326ee5204b0087c34a539ff7f5e4_3_1" id="input_8d02326ee5204b0087c34a539ff7f5e4_3_1" aria-describedby="status_8d02326ee5204b0087c34a539ff7f5e4_3_1" value=""/>
<span class="trailing_text" id="trailing_text_8d02326ee5204b0087c34a539ff7f5e4_3_1"/>
<span class="status unanswered" id="status_8d02326ee5204b0087c34a539ff7f5e4_3_1" data-tooltip="Not yet answered.">
<span class="sr">unanswered</span><span class="status-icon" aria-hidden="true"/>
</span>
<p id="answer_8d02326ee5204b0087c34a539ff7f5e4_3_1" class="answer"/>
</div>
</div></div><p style="display:inline">million</p></p>
</li>
<li>
What is its time to maturity?
<p><div class="inline" tabindex="-1" aria-label="Question 3" role="group"><div id="inputtype_8d02326ee5204b0087c34a539ff7f5e4_4_1" class=" capa_inputtype inline textline">
<div class="unanswered inline">
<input type="text" name="input_8d02326ee5204b0087c34a539ff7f5e4_4_1" id="input_8d02326ee5204b0087c34a539ff7f5e4_4_1" aria-describedby="status_8d02326ee5204b0087c34a539ff7f5e4_4_1" value=""/>
<span class="trailing_text" id="trailing_text_8d02326ee5204b0087c34a539ff7f5e4_4_1"/>
<span class="status unanswered" id="status_8d02326ee5204b0087c34a539ff7f5e4_4_1" data-tooltip="Not yet answered.">
<span class="sr">unanswered</span><span class="status-icon" aria-hidden="true"/>
</span>
<p id="answer_8d02326ee5204b0087c34a539ff7f5e4_4_1" class="answer"/>
</div>
</div></div><p style="display:inline">years</p></p>
</li>
</ol>
<div class="solution-span">
<span id="solution_8d02326ee5204b0087c34a539ff7f5e4_solution_1"/>
</div></div>
<div class="action">
<input type="hidden" name="problem_id" value="Exercise: What is an Option?" />
<div class="submit-attempt-container">
<button type="button" class="submit btn-brand" data-submitting="Submitting" data-value="Submit" data-should-enable-submit-button="True" aria-describedby="submission_feedback_8d02326ee5204b0087c34a539ff7f5e4" >
<span class="submit-label">Submit</span>
</button>
<div class="submission-feedback" id="submission_feedback_8d02326ee5204b0087c34a539ff7f5e4">
<span class="sr">Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button.</span>
</div>
</div>
<div class="problem-action-buttons-wrapper">
<span class="problem-action-button-wrapper">
<button type="button" class="show problem-action-btn btn-default btn-small" aria-describedby="8d02326ee5204b0087c34a539ff7f5e4-problem-title"><span class="icon fa fa-info-circle" aria-hidden="true"></span><span class="show-label">Show Answer</span></button>
</span>
</div>
</div>
<div class="notification warning notification-gentle-alert
is-hidden"
tabindex="-1">
<span class="icon fa fa-exclamation-circle" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="8d02326ee5204b0087c34a539ff7f5e4-problem-title">
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
<div class="notification warning notification-save
is-hidden"
tabindex="-1">
<span class="icon fa fa-save" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="8d02326ee5204b0087c34a539ff7f5e4-problem-title">None
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
<div class="notification general notification-show-answer
is-hidden"
tabindex="-1">
<span class="icon fa fa-info-circle" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="8d02326ee5204b0087c34a539ff7f5e4-problem-title">Answers are displayed within the problem
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
</div>
"
data-graded="False">
<p class="loading-spinner">
<i class="fa fa-spinner fa-pulse fa-2x fa-fw"></i>
<span class="sr">Loading…</span>
</p>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@c340dfbabaae4b769c6ca99fd975984e" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">Valuation of Options</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@video+block@326cafd3e8bc4409b8d170dec07e5e0b">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-block-type="video" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@video+block@326cafd3e8bc4409b8d170dec07e5e0b" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">Valuation of Options</h3>
<div
id="video_326cafd3e8bc4409b8d170dec07e5e0b"
class="video closed"
data-metadata='{"transcriptLanguages": {"en": "English"}, "captionDataDir": null, "autoAdvance": false, "poster": null, "publishCompletionUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@326cafd3e8bc4409b8d170dec07e5e0b/handler/publish_completion", "transcriptLanguage": "en", "showCaptions": "true", "completionEnabled": false, "prioritizeHls": false, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007600/MITx15.482x-V007600.m3u8", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007600_DTH.mp4"], "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@326cafd3e8bc4409b8d170dec07e5e0b/handler/transcript/available_translations", "ytApiUrl": "https://www.youtube.com/iframe_api", "autohideHtml5": false, "start": 0.0, "generalSpeed": 1.0, "recordedYoutubeIsAvailable": true, "speed": null, "end": 0.0, "ytMetadataEndpoint": "", "savedVideoPosition": 0.0, "ytTestTimeout": 1500, "autoplay": false, "saveStateUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@326cafd3e8bc4409b8d170dec07e5e0b/handler/xmodule_handler/save_user_state", "saveStateEnabled": false, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@326cafd3e8bc4409b8d170dec07e5e0b/handler/transcript/translation/__lang__", "streams": "", "completionPercentage": 0.95, "duration": 602.58, "lmsRootURL": "https://openlearninglibrary.mit.edu"}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="326cafd3e8bc4409b8d170dec07e5e0b"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@28a553b9c4d440829ac822238f45ce0a" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">The Role of p</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@video+block@66a41c8249ec44c68be76ada9d873709">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-block-type="video" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@video+block@66a41c8249ec44c68be76ada9d873709" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">The Role of p</h3>
<div
id="video_66a41c8249ec44c68be76ada9d873709"
class="video closed"
data-metadata='{"transcriptLanguages": {"en": "English"}, "captionDataDir": null, "autoAdvance": false, "poster": null, "publishCompletionUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@66a41c8249ec44c68be76ada9d873709/handler/publish_completion", "transcriptLanguage": "en", "showCaptions": "true", "completionEnabled": false, "prioritizeHls": false, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V008500_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V008500/MITx15.482x-V008500.m3u8"], "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@66a41c8249ec44c68be76ada9d873709/handler/transcript/available_translations", "ytApiUrl": "https://www.youtube.com/iframe_api", "autohideHtml5": false, "start": 0.0, "generalSpeed": 1.0, "recordedYoutubeIsAvailable": true, "speed": null, "end": 0.0, "ytMetadataEndpoint": "", "savedVideoPosition": 0.0, "ytTestTimeout": 1500, "autoplay": false, "saveStateUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@66a41c8249ec44c68be76ada9d873709/handler/xmodule_handler/save_user_state", "saveStateEnabled": false, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@66a41c8249ec44c68be76ada9d873709/handler/transcript/translation/__lang__", "streams": "", "completionPercentage": 0.95, "duration": 522.13, "lmsRootURL": "https://openlearninglibrary.mit.edu"}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="66a41c8249ec44c68be76ada9d873709"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@6fa6b1d7ada144418fa0ebe69bc5f04b" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">Exercise: Valuation of Options</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@problem+block@de554bcd8a0347f59f47f61706b4493e">
<div class="xblock xblock-public_view xblock-public_view-problem xmodule_display xmodule_ProblemBlock" data-block-type="problem" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@problem+block@de554bcd8a0347f59f47f61706b4493e" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="True" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Problem"}
</script>
<div id="problem_de554bcd8a0347f59f47f61706b4493e" class="problems-wrapper" role="group"
aria-labelledby="de554bcd8a0347f59f47f61706b4493e-problem-title"
data-problem-id="block-v1:MITx+15.480x+3T2021+type@problem+block@de554bcd8a0347f59f47f61706b4493e" data-url="/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@problem+block@de554bcd8a0347f59f47f61706b4493e/handler/xmodule_handler"
data-problem-score="0.0"
data-problem-total-possible="2.0"
data-attempts-used="0"
data-content="
<h3 class="hd hd-3 problem-header" id="de554bcd8a0347f59f47f61706b4493e-problem-title" aria-describedby="block-v1:MITx+15.480x+3T2021+type@problem+block@de554bcd8a0347f59f47f61706b4493e-problem-progress" tabindex="-1">
Exercise: Valuation of Options
</h3>
<div class="problem-progress" id="block-v1:MITx+15.480x+3T2021+type@problem+block@de554bcd8a0347f59f47f61706b4493e-problem-progress"></div>
<div class="problem">
<div>
<span>
<p>Imagine you are the CFO of ABC Pharmaceuticals, and you have just financed a Phase 3 clinical trial for a new migraine medication at a cost of $200 million. If the trial is successful, the market launch for the new therapy would cost $100 million, and would occur at the end of the clinical trial in 3 years. In addition, depending on economic market conditions, the present value of future commercialization profits could either go up 50% to $750 million or down 50% to $250 million. The 3-year annualized risk-free rate is 4% per year.
</p>
<ol>
<li>Ignoring the scientific risk associated with the trial (which is assumed to be independent of the market risk), what is the value of the project? (Note: Your answer should be expressed in units of millions of dollars.)
<p><p style="display:inline">$</p><div class="inline" tabindex="-1" aria-label="Question 1" role="group"><div id="inputtype_de554bcd8a0347f59f47f61706b4493e_2_1" class=" capa_inputtype inline textline">
<div class="unanswered inline">
<input type="text" name="input_de554bcd8a0347f59f47f61706b4493e_2_1" id="input_de554bcd8a0347f59f47f61706b4493e_2_1" aria-describedby="status_de554bcd8a0347f59f47f61706b4493e_2_1" value=""/>
<span class="trailing_text" id="trailing_text_de554bcd8a0347f59f47f61706b4493e_2_1"/>
<span class="status unanswered" id="status_de554bcd8a0347f59f47f61706b4493e_2_1" data-tooltip="Not yet answered.">
<span class="sr">unanswered</span><span class="status-icon" aria-hidden="true"/>
</span>
<p id="answer_de554bcd8a0347f59f47f61706b4493e_2_1" class="answer"/>
</div>
</div></div><p style="display:inline">million</p></p>
</li>
<li>Now suppose the probability of success of the trial, due to scientific risk, is 60%. What is the rNPV of the project? Assume the project has no value if it fails. (Note: Your answer should be expressed in units of millions of dollars.)
<p><p style="display:inline">$</p><div class="inline" tabindex="-1" aria-label="Question 2" role="group"><div id="inputtype_de554bcd8a0347f59f47f61706b4493e_3_1" class=" capa_inputtype inline textline">
<div class="unanswered inline">
<input type="text" name="input_de554bcd8a0347f59f47f61706b4493e_3_1" id="input_de554bcd8a0347f59f47f61706b4493e_3_1" aria-describedby="status_de554bcd8a0347f59f47f61706b4493e_3_1" value=""/>
<span class="trailing_text" id="trailing_text_de554bcd8a0347f59f47f61706b4493e_3_1"/>
<span class="status unanswered" id="status_de554bcd8a0347f59f47f61706b4493e_3_1" data-tooltip="Not yet answered.">
<span class="sr">unanswered</span><span class="status-icon" aria-hidden="true"/>
</span>
<p id="answer_de554bcd8a0347f59f47f61706b4493e_3_1" class="answer"/>
</div>
</div></div><p style="display:inline">million</p></p>
</li>
</ol>
<p>
<div class="solution-span">
<span id="solution_de554bcd8a0347f59f47f61706b4493e_solution_1"/>
</div></p>
</span>
</div>
<div class="action">
<input type="hidden" name="problem_id" value="Exercise: Valuation of Options" />
<div class="submit-attempt-container">
<button type="button" class="submit btn-brand" data-submitting="Submitting" data-value="Submit" data-should-enable-submit-button="True" aria-describedby="submission_feedback_de554bcd8a0347f59f47f61706b4493e" >
<span class="submit-label">Submit</span>
</button>
<div class="submission-feedback" id="submission_feedback_de554bcd8a0347f59f47f61706b4493e">
<span class="sr">Some problems have options such as save, reset, hints, or show answer. These options follow the Submit button.</span>
</div>
</div>
<div class="problem-action-buttons-wrapper">
<span class="problem-action-button-wrapper">
<button type="button" class="show problem-action-btn btn-default btn-small" aria-describedby="de554bcd8a0347f59f47f61706b4493e-problem-title"><span class="icon fa fa-info-circle" aria-hidden="true"></span><span class="show-label">Show Answer</span></button>
</span>
</div>
</div>
<div class="notification warning notification-gentle-alert
is-hidden"
tabindex="-1">
<span class="icon fa fa-exclamation-circle" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="de554bcd8a0347f59f47f61706b4493e-problem-title">
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
<div class="notification warning notification-save
is-hidden"
tabindex="-1">
<span class="icon fa fa-save" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="de554bcd8a0347f59f47f61706b4493e-problem-title">None
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
<div class="notification general notification-show-answer
is-hidden"
tabindex="-1">
<span class="icon fa fa-info-circle" aria-hidden="true"></span>
<span class="notification-message" aria-describedby="de554bcd8a0347f59f47f61706b4493e-problem-title">Answers are displayed within the problem
</span>
<div class="notification-btn-wrapper">
<button type="button" class="btn btn-default btn-small notification-btn review-btn sr">Review</button>
</div>
</div>
</div>
"
data-graded="False">
<p class="loading-spinner">
<i class="fa fa-spinner fa-pulse fa-2x fa-fw"></i>
<span class="sr">Loading…</span>
</p>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@31c2d6df21214a95a8d4b54da32b78ae" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">Multiperiod Extension</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@video+block@1242e84cf46b428aaee819995c3096c4">
<div class="xblock xblock-public_view xblock-public_view-video xmodule_display xmodule_VideoBlock" data-block-type="video" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@video+block@1242e84cf46b428aaee819995c3096c4" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "Video"}
</script>
<h3 class="hd hd-2">Multiperiod Extension</h3>
<div
id="video_1242e84cf46b428aaee819995c3096c4"
class="video closed"
data-metadata='{"transcriptLanguages": {"en": "English"}, "captionDataDir": null, "autoAdvance": false, "poster": "https://mitx-edx-video-meta-storage.s3.amazonaws.com/media/video-images/33f90a6040c94088a859ec18b3dc2d3d.png?Expires=1714099527&Signature=oz8vrKbR4JLZTiHZ3zAWUB3Ntas%3D&x-amz-security-token=IQoJb3JpZ2luX2VjEGoaCXVzLWVhc3QtMSJGMEQCIFaKrWz96irBnnm%2BEQgCrxuuu%2BxkDTXqQnXDMOyoG5GJAiBijKrddAKAxp7X5DTg%2BwnHn4FvEi%2FH%2FJqPCwTmBcgvOCrDBQiz%2F%2F%2F%2F%2F%2F%2F%2F%2F%2F8BEAMaDDg1OTIwNTYzNzQxMSIMwK6uDE%2F25pBs2oLCKpcF%2BDEseF7oSKDuemTnrmZDM%2BwwqOtp62OWwijXZ3up6WzKbMs%2FCChsOzjuAefmo5XPHIQzIR98aWhPAB6zpTALNr2%2FYeuqkPIIAMX7eIjfgjJHC%2BwcrKSujq%2FJukelM4FQvN9j17nUSJthUdzg9fzIkjNcNY%2BUh6fZub8Sqrf2soynKEGFCyrf07ynu%2FRsuN2tg8htxlCuvNrdf%2BZvKcj%2BrPFU5z%2FHj6rAuvQlOrvzbTpOG8KV6i0xEr4Ug1eJ3yIl6Bo8KHZ8hLQ3ej9ZU0EA%2FsM0ZDy6UJLzm6HdUz1I%2Fwpnb5hUSDf%2Fwmz4myLu%2Fli7a7CjMwHKuk%2BYhlOnN2yuXT36HwH6GkbteUSPh0Kw8hv9IPfvDHZBD6XFTh76g%2Bo7%2FqzKkAftPLSJb3%2Fb9E2gvDaZxccpyWdft2cjYxanZkkHwV6XMkgnJ5NhNiwRDCzPV10OTEwzwMK2%2F3hYegw2p%2Baj%2Bt3jYh4vz%2B98nwfRTWTTLG%2B6v6PFAOrd9741ekod%2FRLDx9D8nlQIvDKSSnNj78K935ufWq5W8V4beeDL8%2FyToMJ5vsUgiQ7Y%2F%2Fg8buRRbE4w2M0siQRiW5g2wuxJ1IDRpDTU6lEwHhu1t9OvIuhQbSYUE%2BMNKbiFNU86xL1SFSb9mGXte4waBMYXb%2Fmty0VFbR206CpnCxm%2F4GmrGElmXgWdL0ek12ClIt9Au053j8r5no13ASd4hHcPndtI%2FFauokEb4TTVgKCGRUXkgVnxwqwLk0LoG7Lic%2FC9lZP1cZiZADnvrTvlcp1%2BeVsFTVN0bGQTKVmAdWHENuxHGTagYDHss47DoveG%2FXRFsq4gevNxSDWPd93jmrBQQA92Lru68DwJDO6AMqwr8%2Bc8c%2FVqEMyHt%2B9JMJiQrLEGOrIBeYIvb%2Fz%2F085nRtRGRgPijegafn0TIj%2FeZucU0f%2Fcbore%2Bz%2BhVaOC%2FKTT%2FFlxjTFwMZxC9kWakjADm03gPUYKVTqMTcwZO5nSRDbQ9x2TD9WlIDswZnVR3EJKAKxyaNqEOA9qZb0VmmecgSWmmukkVbEYQF851YXtH3%2BrDRnpxWryNaedCuU4wirDnFwuTiiQuI5GIICJBf%2FgAo%2BaHeUSSHBt7eEx8dbyLtyTI0unmW3bjA%3D%3D&AWSAccessKeyId=ASIA4QDFFSURVB5TURVM", "publishCompletionUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@1242e84cf46b428aaee819995c3096c4/handler/publish_completion", "transcriptLanguage": "en", "showCaptions": "true", "completionEnabled": false, "prioritizeHls": false, "sources": ["https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007500_DTH.mp4", "https://d2f1egay8yehza.cloudfront.net/MITx15.482x-V007500/MITx15.482x-V007500.m3u8"], "transcriptAvailableTranslationsUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@1242e84cf46b428aaee819995c3096c4/handler/transcript/available_translations", "ytApiUrl": "https://www.youtube.com/iframe_api", "autohideHtml5": false, "start": 0.0, "generalSpeed": 1.0, "recordedYoutubeIsAvailable": true, "speed": null, "end": 0.0, "ytMetadataEndpoint": "", "savedVideoPosition": 0.0, "ytTestTimeout": 1500, "autoplay": false, "saveStateUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@1242e84cf46b428aaee819995c3096c4/handler/xmodule_handler/save_user_state", "saveStateEnabled": false, "transcriptTranslationUrl": "/courses/course-v1:MITx+15.480x+3T2021/xblock/block-v1:MITx+15.480x+3T2021+type@video+block@1242e84cf46b428aaee819995c3096c4/handler/transcript/translation/__lang__", "streams": "", "completionPercentage": 0.95, "duration": 61.01, "lmsRootURL": "https://openlearninglibrary.mit.edu"}'
data-bumper-metadata='null'
data-autoadvance-enabled="False"
data-poster='null'
tabindex="-1"
>
<div class="focus_grabber first"></div>
<div class="tc-wrapper">
<div class="video-wrapper">
<span tabindex="0" class="spinner" aria-hidden="false" aria-label="Loading video player"></span>
<span tabindex="-1" class="btn-play fa fa-youtube-play fa-2x is-hidden" aria-hidden="true" aria-label="Play video"></span>
<div class="video-player-pre"></div>
<div class="video-player">
<div id="1242e84cf46b428aaee819995c3096c4"></div>
<h4 class="hd hd-4 video-error is-hidden">No playable video sources found.</h4>
<h4 class="hd hd-4 video-hls-error is-hidden">
Your browser does not support this video format. Try using a different browser.
</h4>
</div>
<div class="video-player-post"></div>
<div class="closed-captions"></div>
<div class="video-controls is-hidden">
<div>
<div class="vcr"><div class="vidtime">0:00 / 0:00</div></div>
<div class="secondary-controls"></div>
</div>
</div>
</div>
</div>
<div class="focus_grabber last"></div>
</div>
</div>
</div>
</div>
</div>
<div class="xblock xblock-public_view xblock-public_view-vertical" data-block-type="vertical" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@vertical+block@70c78078422249fbaf586b7b88f3f0ae" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="VerticalStudentView" data-request-token="55c1b87a037611efa5450afff417eba9">
<h2 class="hd hd-2 unit-title">Interactive: Black-Scholes Formula</h2>
<div class="vert-mod">
<div class="vert vert-0" data-id="block-v1:MITx+15.480x+3T2021+type@html+block@d264e14c1a21431ba7091360fc058414">
<div class="xblock xblock-public_view xblock-public_view-html xmodule_display xmodule_HtmlBlock" data-block-type="html" data-runtime-class="LmsRuntime" data-usage-id="block-v1:MITx+15.480x+3T2021+type@html+block@d264e14c1a21431ba7091360fc058414" data-course-id="course-v1:MITx+15.480x+3T2021" data-has-score="False" data-graded="False" data-runtime-version="1" data-init="XBlockToXModuleShim" data-request-token="55c1b87a037611efa5450afff417eba9">
<script type="json/xblock-args" class="xblock-json-init-args">
{"xmodule-type": "HTMLModule"}
</script>
<p>The graph below calculates the price of a call option using the Black-Scholes formula. What happens to the option's price if you change the volatility of the underlying stock? What happens if you change the option's maturity or strike price? </p>
<p style="text-align: center;"><iframe title="Perpetuity" src="https://courses.edx.org/asset-v1:MITx+15.482x+1T2019+type@asset+block@Unit5_BlackScholes.html" width="530" height="700" marginwidth="0" marginheight="0" frameborder="0" scrolling="no">
Your browser does not support IFrames.
</iframe></p>
</div>
</div>
</div>
</div>
© All Rights Reserved