startup-valuation

Options & Scenario Analysis

valuation_advanced

Read-onlyIdempotent

Compute option values with Black-Scholes or binomial trees, or run named bull/base/bear scenario analysis. Select a method; supply required inputs.

Instructions

Advanced techniques: Black-Scholes call value, binomial-tree option value, and scenario analysis. Method selects the technique. For a quick expected value over arbitrary outcome lists, prefer valuation_probability with method 'probability_weighted'; scenario_analysis here is for explicit named bull/base/bear scenario tables. Parameters apply per method: black_scholes and binomial need underlying + strike + risk_free_rate + volatility + time_to_maturity (binomial adds steps); scenario_analysis needs scenarios. Not for plain discounted cash flow — for that use valuation_time_value. Only method is required; other parameters are method-dependent, so supply those named for the selected method and omit the rest (documented defaults apply where defined). Returns an object with value, method, inputs, assumptions, chapter, formula_number and calculation steps. Pure arithmetic: no I/O and no external calls, and numeric results are returned rounded to 2 decimals. No authentication, credentials, or rate limits apply. Supplying an unknown method, or leaving unset a parameter that the chosen method requires, returns an error instead of a value.

Input Schema

TableJSON Schema

Name	Required	Description
`steps`	No	Binomial tree time steps (higher = more accurate).
`method`	Yes	Formula to apply. Options: black_scholes = C = N(d₁)S - N(d₂)Ke^(-rT).; binomial = Cox-Ross-Rubinstein binomial option value.; scenario_analysis = E[V] = Σ pᵢ·Vᵢ over named scenarios.
`strike`	No	Strike / exercise price K, currency units.
`scenarios`	No	Scenario objects: {name: str, probability: 0-1, value: currency}; probabilities should sum to 1.
`underlying`	No	Underlying asset value S, currency units.
`volatility`	No	Annualised volatility σ as a decimal (0.80 = 80%).
`risk_free_rate`	No	Risk-free rate as a decimal (e.g. 0.04 for 4%).
`time_to_maturity`	No	Time to expiry in years T.

Output Schema

TableJSON Schema

Name	Required	Description
`error`	No	Error message when the call fails.
`steps`	No	Intermediate steps for traceability.
`value`	Yes	Computed valuation or metric.
`inputs`	No	Echo of the normalised inputs used.
`method`	No	Formula / method name that produced the result.
`chapter`	No	Source textbook chapter.
`assumptions`	No	Modelling assumptions applied.
`formula_number`	No	Source textbook formula number (e.g. '3.1').

Schema Changelog

Changes observed during successful MCP inspections.

First observedv0.1.0Sep 30, 2026

TDQS

A4.6/5.0

Behavior4/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already cover the safety profile (readOnly, idempotent, closed-world). The description adds real behavioral context beyond them: pure arithmetic with no I/O or external calls, results rounded to 2 decimals, and explicit error behavior for unknown methods or missing required params. It loses a point only because return-field enumeration is redundant against the existing output schema.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

Front-loaded with technique names and routing guidance, and dense with actionable detail. Slightly over-long because the return-object field list and the no-auth/no-rate-limit clause restate things already implied by annotations and the output schema.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

For an 8-parameter, method-dispatch tool with a rich schema, output schema, and annotations, the description covers routing, method-parameter contracts, error semantics, and numeric formatting. Nothing an agent needs to invoke it correctly is missing.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters4/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so baseline is 3, but the description adds genuine value by mapping which parameters each method requires (black_scholes/binomial need underlying+strike+risk_free_rate+volatility+time_to_maturity, binomial adds steps, scenario_analysis needs scenarios) — a method-to-parameter contract the schema does not express.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

States specific techniques (Black-Scholes call value, binomial-tree option value, scenario analysis) and the method-selection mechanism. Explicitly distinguishes itself from valuation_probability and valuation_time_value by name, so the agent can route without opening schemas.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Gives explicit when-to-use and when-not-to-use: 'For a quick expected value over arbitrary outcome lists, prefer valuation_probability', 'Not for plain discounted cash flow — for that use valuation_time_value'. Names alternatives and the conditions selecting them.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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