Applying the black-scholes options pricing model to solve corporate investment and financing problems: A synthesis

The Black-Scholes Option Pricing Model is accepted as an appropriate method for valuing financial options. It also offers insight into many corporate investment and financing decisions which have options embedded in them. This paper provides a review of the salient characteristics of options, a discussion about option pricing, and, drawing from recent Finance literature, an overview of corporate investment and financing applications of the Black-Scholes OPM.