In: Finance
Assume that you, as an STI employee, were awarded options on 1,000 shares of STI stock today at the current market price. Without doing a detailed numerical calculation, make your best-guess estimate as to the economic value of this option grant. What factors did you consider in making your estimate? Would this option grant likely affect any of your behaviors? If so, how?
Yes, it'll affect the behaviour. where one need to watching the market regularly. If we classify investing based on average time invested in a particular stock, then we would have four broad categories:
Prsopect theory - This theory, contributed by Daniel Kahneman which won him Noble prize for economics in 2002. As per the theory, the possibility of loss has twice the psychological impact than a gain. More psychological impact means more stress. The amount of stress is very low if we incur a loss of Rs 100,000/- in a single shot as compared to the stress we go through if we incurr a loss of Rs 1000/- each day for 100 days.