Introduction to Expected Term

Takis Makridis

While companies have the flexibility to choose between lattice models and the Black-Scholes-Merton (BSM) formula, or any other model that incorporates the required inputs, this liberalism often overshadows the reality that ASC 718 calls for substantial rigor in estimating model inputs. This White Paper reviews the difficulties confounding the expected term calculation, and the best practice techniques that support the estimation of a reliable fair value for financial reporting.

Download This White Paper