Black Scholes, also known as the Black Scholes Merton Model
, is believed to be the base of all financial theories and is practically very useful in determining the value of all European call options. It has a practical importance in finding the asset values of all the heavily traded assets. It serves the base model of financial theories that strongly believes that all such heavily in demand assets follow a geometric Brownian motion that have constant drift and volatility. It is also very useful in determining the value of the stock options that is available at different level of the asset.
The theory of Black Scholes was invented by Fisher Black, Myron Scholes, and Robert Merton in the year 1973. It raised a heavy appreciation among the experts of financial theories and was greatly welcomed by everyone without any hesitation. You can easily realize the importance and accuracy of this theory even today when the market is full of ups and downs as far as the financial status is concerned. People take help of this theory in determining the fair price of different options.
This theory works as one of the most authentic sources of handling of data and facts and figures that are continuously used in the job of determining the assets value. It primarily works upon many other theories in which Financial Modeling Mean is the most important. The Financial Modeling Mean is a trusted as the most effective process that every company prepares to represent all or some aspects of its securities. It generally works on the basis of heavy calculations and it prepares recommendations on the basis of the data so formed.
Today, the financial models are made with hands and also with the help of computer software. However, the concept and the logic behind these models are characterized by the models that are prepared by the expert makers of these models.