Re: Mental Models - Merton/Real Options Framework for Debt & Equity.
You may have heard of the Merton Model or Real Options Theory, but might not know how to apply the concepts in everyday investing. This post demystifies the financial jargon into something practical.
You may have heard of the Merton Model or Real Options Theory, but might not know how to apply the concepts in everyday investing/trading. This post demystifies the financial jargon into something practical. We are going to use our knowledge of Financial Options to model Equity and Debt Securities as Real Options on the underlying Firm’s Assets.
As a for…
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