Application Of The Option Theory In Corporate Finance

The financial manangement is one of the most important components of business administration .The performance level of company's financing concerns the success or failure of enterprises directly. In the behavior of financial management, an important subject is how to face uncertainty. An economist has ever said that it is the uncertainty that this world is only confirmed. Science and technology change every day. The constant change of international economic form is varied. All these domestic and foreign environment changes have brought the enormous challenge to financial management.Because the traditional decision method is unable to calculate deterministically value effectively, it is difficult to make correct decision and thus does not meet the needs of competing to a great extent. The purpose of this text lies in seeking a kind of more rational, more scientific method of financing decision which makes every financial administration of enterprises reach best and realizes the financial goal of maximum of enterprise value. There is application on the financial market as a kind of derivative in the option, but right represents a kind of thought in the corresponding period. Because speaking from the essence, the so-called policy-making power is the realization of the right to choose. This text on the basis of analysing behavior option characteristic that enterprises manage money matters applies the pricing theory of the option to enterprise's financial affairs' practise and has realized to the effective measurement of company value. This text adopts and standardizes the method to analyse mainly. Through reasoning, compareing and giving an example this text has proved the concrete application in financial management of the option theory in detail. It can be found through making a concrete analysis of the using a pricing theory of option that all financing behaviors possess the characteristics of option basically. The traditional financial decision method is unable to measure this kind of options worth .So measuring value of material option by pricing theory option is a break-through method and can be more scientific and reasonable.