Abstract:

Using the contingent claim model and the hedging method, we solved the investment and financial problems of a company so as to get the value of the company and the price critical value for its stopping production. The results show that  if the prices of the investment products are falling, the lever company shall stop the operating activities prior to the nonliability company when the other conditions are the same, otherwise, they will do business at a sacrifice.

Key words: contingent claim model； hedging method； company value； price critical value