The Black & Scholes Call Option Model for Valuing Stock's Pre-Emptive Right in Istanbul Stock Exchange Market (IMKB)

Ergeç, Fulya

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Özgün Başlık
The Black & Scholes Call Option Model for Valuing Stock's Pre-Emptive Right in Istanbul Stock Exchange Market (IMKB)

Yazarlar
Fulya Ergeç

Dergi Adı
Istanbul Management Journal

Cilt
Haziran 1997, Sayı 27, ss. 53-59

Özet
Use Or Rights Issues and Firm's Revaluation Fund On Financing We compared two models to value stock's preemptive right in IMKB. One of the models is called a traditional model which is used by IMKB to value rights issue is Black & Scholes call option pricing model. We think each right would be treated as a call option, when a firm raised new equity capital. This is because a rights is an option to buy the shares of the company at the subscription price (the exercise price) for a specified period of time. We tested both models to value 37 numsers of rights issues belong to firms quoted in IMKB. Rights issues prices were found by both models were compared with market prices of rights issues in IMKB. We show either rights issues market prices of 37 firms in IMKB or rights issues prices of 37 firms in IMKB were found by both models in table at the end of the essay.