Which Valuation Technique Uses Option Pricing Models to Determine Fair

question 14

Multiple Choice

Which valuation technique uses option pricing models to determine fair value?

• A) Income approach
• B) Cost approach
• C) Market approach
• D) Asset approach

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Definitions:

Relevant Costs

Costs that are pertinent to a particular decision-making process, which differ among alternatives.

Traceable Fixed Expenses

Fixed costs that can be directly linked to a specific product, department, or segment of a company, making it easier to allocate expenses accurately.

Common Fixed Expenses

Expenses shared across different departments or product lines within a company that do not change with production or sales volume.

Sales Dollars

A measurement of revenue generated from sales activities, expressed in the currency of dollars.