A community for students.
Here's the question you clicked on:
 0 viewing
anonymous
 5 years ago
Hi. I am trying to value an undeveloped patent using black and scholes. However, I am not sure that I understand the formula well. if the cost of delay =1/the remaining life of the patent this means that always Stock price x exponential (cost of delay x life of the patent) will yield Stock price x exponential (1) withput any need to compute the cost of delay. Is this true? it seems weird though :). I am wondering why cost of delay is not constant 1/initial life of the patent as it makes more sense than having exponential (1) always.
anonymous
 5 years ago
Hi. I am trying to value an undeveloped patent using black and scholes. However, I am not sure that I understand the formula well. if the cost of delay =1/the remaining life of the patent this means that always Stock price x exponential (cost of delay x life of the patent) will yield Stock price x exponential (1) withput any need to compute the cost of delay. Is this true? it seems weird though :). I am wondering why cost of delay is not constant 1/initial life of the patent as it makes more sense than having exponential (1) always.

This Question is Closed

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0Because the cost of delay will increase as you go through time.. with fewer years left on the patent, you have more to lose.
Ask your own question
Sign UpFind more explanations on OpenStudy
Your question is ready. Sign up for free to start getting answers.
spraguer
(Moderator)
5
→ View Detailed Profile
is replying to Can someone tell me what button the professor is hitting...
23
 Teamwork 19 Teammate
 Problem Solving 19 Hero
 Engagement 19 Mad Hatter
 You have blocked this person.
 ✔ You're a fan Checking fan status...
Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.