and Learn about Shares
Managers in different fields are faced with investment decisions under market and technological uncertainties. The future opportunities involving uncertainties and managerial flexibility should be valued by the real options approach and no more by the methods based on discounted cash flow (DCF), since the later cannot correctly capture the operating flexibility available within the project. In this book, the authors show how to apply the real options approach to real world fields. We develop a dynamic programming approach in diverse fields characterized by different types of uncertainty, including telecommunications, sustainable transport and acquisition of innovative technological firms. Depending on the application field, we consider proprietary real options held by one firm or shared options where several competing firms hold the investment opportunity.
Environmental constraints and market uncertainties create new challenges for electricity generation. In this title, originally published in 1991, the authors present a simulation model with a capability for highly detailed activity to identify cost-minimising investment options under different assumptions about demand, costs, regulation, and other economic and environmental factors. Applying the model to two U.S. regions having sharply different electricity demand and supply characteristics, they identify the importance of advanced technologies and augmented electricity trade among regions. This title is ideal for students interested in environmental studies.
Modern option pricing theory was developed in the late sixties and early seventies by F. Black, R. e. Merton and M. Scholes as an analytical tool for pricing and hedging option contracts and over-the-counter warrants. How- ever, already in the seminal paper by Black and Scholes, the applicability of the model was regarded as much broader. In the second part of their paper, the authors demonstrated that a levered firm's equity can be regarded as an option on the value of the firm, and thus can be priced by option valuation techniques. A year later, Merton showed how the default risk structure of cor- porate bonds can be determined by option pricing techniques. Option pricing models are now used to price virtually the full range of financial instruments and financial guarantees such as deposit insurance and collateral, and to quantify the associated risks. Over the years, option pricing has evolved from a set of specific models to a general analytical framework for analyzing the production process of financial contracts and their function in the financial intermediation process in a continuous time framework. However, very few attempts have been made in the literature to integrate game theory aspects, i. e. strategic financial decisions of the agents, into the continuous time framework. This is the unique contribution of the thesis of Dr. Alexandre Ziegler. Benefiting from the analytical tractability of contin- uous time models and the closed form valuation models for derivatives, Dr.
and Learn about Shares Articles
and Learn about Shares Books
and Learn about Shares