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5 - Option Pricing Theory

Published online by Cambridge University Press:  09 February 2017

Raghavendra Rau
Affiliation:
Judge Business School, Cambridge
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Summary

Every summer in Cambridge, England, the Cambridge Shakespeare Festival puts on a series of plays in the college gardens. These are very popular with the audience, who bring their own chairs, blankets, and picnic baskets to watch Shakespeare in a gorgeous college garden. However, there is one big downside – the English weather. Buying the (non-refundable) tickets well in advance will reserve a place for you but, unfortunately, exposes you to the risk that it will pour down on the day of the performance, leaving you sitting on a sodden blanket watching a bunch of unhappy actors who would also rather be elsewhere. Not buying the tickets in advance, in contrast, exposes you to the risk that the weather will be gorgeous on the day but the show will be sold out (or that ticket prices rise too much for you to afford), leaving you on the road outside the garden, listening to the sounds of merriment and wishing you were inside.

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Chapter
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Publisher: Cambridge University Press
Print publication year: 2016

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  • Option Pricing Theory
  • Raghavendra Rau, Judge Business School, Cambridge
  • Book: Short Introduction to Corporate Finance
  • Online publication: 09 February 2017
  • Chapter DOI: https://doi.org/10.1017/9781316105795.006
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  • Option Pricing Theory
  • Raghavendra Rau, Judge Business School, Cambridge
  • Book: Short Introduction to Corporate Finance
  • Online publication: 09 February 2017
  • Chapter DOI: https://doi.org/10.1017/9781316105795.006
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Option Pricing Theory
  • Raghavendra Rau, Judge Business School, Cambridge
  • Book: Short Introduction to Corporate Finance
  • Online publication: 09 February 2017
  • Chapter DOI: https://doi.org/10.1017/9781316105795.006
Available formats
×