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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (178217)	5/29/2004 3:45:35 PM
From: rkral	Read Replies (2) \| Respond to of 186894

OT .. Lizzie, re "But to me its just like accounting in my small business, I account for the revenue when I get the check and not before." Here's some cash-basis vs. accrual-basis accounting info. No public company I've studied uses cash-basis accounting. Do you know of any? accountinginfo.com re "Anyway it is quite clear that a black-scholes expensing model would kill the "up and comer" companies in their most important growth periods ... " That's a posit of the anti-expensing crowd, for which I've never seen a cogent argument. You got one? re "Now we're back to square one with 3 more years of a "study" for options expensing." Jumping the gun a little bit aren't you? You're speaking of Senate Bill S.979 and/or House Bill H.R. 1372. Both bills have been referred to committee, and there has not even been a committee vote yet. You can follow the Congressional action at these sites: thomas.loc.gov thomas.loc.gov re "[ed: Black-Scholes] doesn't work with new issues ..." Even if ... 1) a company is privately held with no price history, or 2) the CFO of an IPO thinks price volatility cannot be estimated ... ... a zero (actually a very very small) volatility number can be plugged into the Black-Scholes formula, and the result will be the FASB "minimum value" for the option. Now the option will be undervalued because of the zero volatility assumption, but that's not the fault of Black-Scholes. It's because the IPO's CFO lacks cojones. :-) Also, the mathematical power of Black-Scholes is not required to obtain this result, but that's not the fault of Black-Scholes either. The important point is, in the limit, Black-Scholes does cover the case of zero volatility. You're stuck in a rut on this point -- due to stubbornness or ignorance, I know not which -- and you're just spinning your wheels making the rut deeper. I suggest you read and reread -- and reread -- the following link until you understand it. investopedia.com Ron