Cisco Systems, Inc. (CSCO) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 74.00

-1.6%

1:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Lizzie Tudor who wrote (64040)	5/15/2003 10:51:46 AM
From: Stock Farmer	Read Replies (2) of 77400

because black sholes overestimates, that is the entire issue with Black Scholes. That's crazy. It's like the police issuing a speeding ticket to each parked car because the driver could press the pedal to the floor and break the speed limit. Black-Scholes doesn't intrinsicly overstate or understate the cost of stock options at all. It is a mathematical formula that depends on input factors such as the expected passage of time, the expected risk free rate of return and the expected volatility over that time. If the person using the model over estimates volatility or holding period or under-estimates risk free rate of return, then yes, the model will crank out an estimate to the high side. But if the person using the model under-estimates the volatility or holding period or over-estimates risk free rate of return, then the model will crank out an estimate to the low side. Management could just as easily low-ball the cost as high-ball it. And in fact, evidence suggests that they are using conservative numbers. John

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next