Fuzzy-stochastic estimation of a firm value as a call option

The author describes a fuzzy-stochastic approach to the valuing of a firm e quity. The Black-Scholes model of valuing call options is set forth and methodolog y of apprising equity under the B-S model is described. Typical features of financial decision-making are indeterminacy and vaguene ss that are often neglected. These aspects also concern the firm equity val uing. Fuzzy-stochastic approach is a very effective instrument for dealing with vagueness and is used in the paper. The author describes and uses the fuzzy set of the T-number type and an extension principle. The author applies a combination of risk (stochastic) and uncertainty (fuzz y) instruments in calculating a firm value as a call option. Input data are in a form of fuzzy sets, result (firm value) is determined also vaguely as a fuzzy set. An illustrative example is then provided. The author concludes that the fuzzy-stochastic approach could be considered as an advanced method of a firm value calculation which could express the decision-making conditions very well.