Option Analysis On Enterprises' Financing Risk

The financing risk is of the most conventional risks confronted in the enterprises' financial management. The frequent fluctuation of exchange rate and interest rate increase enterprises' financing risk. From the point of view of options, this paper makes a analysis of equity financing and debt financing respectively, studied the interrelationships between financing approach, financing size and the value of call option. It was found that the financing risks mainly comes from the three aspects, i.e total return of capital invested, capital structure and cost of debt capital.