What does this line mean in chapter 23 page 16 of the course notes?
“If the purpose of the valuation is pricing the option (rather than setting the liability) then allowance should also be made for the additional reserves that should be held, both before and after exercise.”
“If the purpose of the valuation is pricing the option (rather than setting the liability) then allowance should also be made for the additional reserves that should be held, both before and after exercise.”