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ARTICLE · 27 APRIL 2021

Black Scholes (Morten) Formula And Decentralized Finance Paradigm

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A dollar today is worth more than a dollar tomorrow, which is worth more than a dollar a week from now. That is the simple takeaway from Black Scholes formula or what is often referred to...

United KingdomFinance and Banking
Vaibhav Kadikar
Vaibhav Kadikar

Can the two be really bridged? Do they need to be bridged?

A dollar today is worth more than a dollar tomorrow, which is worth more than a dollar a week from now. That is the simple takeaway from Black Scholes formula or what is often referred to as the "Time value of money" algorithm. It is used by each and every financial institute and entity for a multitude of purposes. This is single most important formula in a financier's armoury or a mergers and acquisition boutiques valuation methodologies.

Time Value of Money - Where is it used? And, how does it help?

It is used everywhere. And, it is meant to be used/applied by people in conjunction with all their information and knowledge to create the basis for various financial analysis. For example, an M&A analyst will understand the business fundamentals, translate these into plausible financial projections, then use the black Scholes (or Time value of money) formula to value the business as a whole to fix a

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