Coupons and Todays Shopper

Before you can get an item out for sell you have to make sure that you take the right steps to getting the marketing and price right on the item. You have to make sure that you are looking at all of the variables to make sure that this is the right move for you to make. You hare make sure that you are working with the marketing mix, that you are calculating cost like you should, that you are estimating for the demand of the materials, and then environmental factors. Making sure that you are doing all of these things correctly can really make or break your item getting out there like you need it to.

There are two different pricing options out there: black-scholes model and the binomial model. When it comes to these two different models they are both very different. “The Black-Scholes model has achieved significant popularity despite the fact that it is extremely complex mathematically.” (Lasher, pg. 392) This model to me seems to be more of what is used more often. When it comes to this model I believe that it has become more popular because everything is more based on technology now days. Everything has calculators and spreadsheets and excel and word. Everything is more functional than it used to be. Having the different warrants and stock options also makes things like this a little tricky. Everything plays into the effect of what model is used and what the prices will be.

“The binomial model option pricing generates a pricing tree in which every node represents the price of the underlying financial instrument at a given point in time. You can use this pricing tree to price options with nonstandard features such as path dependence, look back, and barrier events. For more complex structures, it is better to use Monte Carlo simulation-based option pricing, because it is less computationally intensive.” (math-works, inc, 2014)

Reference: Practical Financial Management, Lasher