This is done by extrapolating a company's earnings out five years, then weighing its expected earnings and dividend streams against its historical stock price volatility (reflecting risk) and the AAA bond yield (reflecting opportunity cost).
Stock Options are dependent on six assumption but stock price, volatility, and expected term are typically the most important.
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Users can program the system to flag sudden shifts in default probabilities, then break them down to see if they result from changes in leverage, stock prices or stock-price volatility.
Get a sense of how volatile a company's business value is by looking at volatility in the stock price.
Their methodology is based on a generally accepted stock price evolution, along with its expected volatility ranges, and an extrapolation as to how that volatility should behave.
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It floated only a small portion of its stock, making it more vulnerable to price volatility, but questions linger about Groupon's competitiveness in the crowded market for discounting online.
It promises to buy and sell the stock at the best going price and to trade even when stock price starts to get out of whack, to smooth out volatility.
Since 2003 bottom, the stock market has had tremendous volatility, he said, whereas the gold price has had a relatively orderly, linear advance that has shown no signs of excess.
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High prices for the precious metal, price volatility, a fragile labor market, depressed real estate prices and volatile stock market all contributed to hesitant consumer demand and fragile consumer confidence, WGC said.
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The run up in the price of the underlying today as well as the rise in implied volatility on the stock seem to have set the stage for the massive position initiated in AEO options.
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