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Yes. But I guess my point is that you can't compensate for the opp cost with equity, because the reward is binary.
by johnrob 19y ago
Yes. But I guess my point is that you can't compensate for the opp cost with equity, because the reward is binary.
- davidw 19y agoTheoretically, you could make one of those calculations like the one that says that a 50% chance at 2 million dollars is equal to a sure million dollars. To real-world proof it though, you'd have to factor in risk aversion.
- timr 19y agoThat's called an expected value calculation: http://en.wikipedia.org/wiki/Expected_value http://en.wikipedia.org/wiki/Expected_value I'm only pointing it out because I also want to note that it's a great way to determine if the contestants on Deal or No Deal are being boneheads.... ;-)