search query: @author Conine, T. E. / total: 8
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| Author: | Conine, T. E. Jensen, O. W. Tamarkin, M. |
| Title: | On optimal output in an option pricing framework |
| Journal: | Journal of Business Finance and Accounting
1988 : SPRING, VOL. 15:1, p.21-26 |
| Index terms: | PRICING DECISION MAKING WEALTH RISK |
| Language: | eng |
| Abstract: | Optimal output decision is examined, assuming that maximization is an appropriate goal in a contingent claims framework. It is assumed that the Black Scholes Option Pricing Model (1973) is a valid description of the pricing of a firm's equity. It is shown in a general framework - i.e. without specification of a particular demand-price tradeoff and cost structure - that a negative monotonic relationship exists between a firm's optimal output and the face value of its debt, and that a positive monotonic relationship exists between a firm's optimal output and the risk-free rate, further on, that an ambiguous relationship exists between a firm's optimal output and both the variance rate of return on its assets and the maturity of its debt. |
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