Question: Please explain why can't we use the simple discounted cash flow method to value an option?For example,knowing the payoff at the terminal date t =T
Please explain why can't we use the simple discounted cash flow method to value an option?For example,knowing the payoff at the terminal date t =T ,then discounted it back to the present to obtain the present value.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
