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Author: Rainer Brosch
Publisher: Springer Science & Business Media
ISBN: 3540782990
Category : Business & Economics
Languages : en
Pages : 168
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Book Description
Valuing portfolios of options embedded in investment decisions is arguably one of the most important and challenging problems in real options and corporate ?nance in general. Although the problem is common and vitally important in the value creation process of almost any corporation, it has not yet been satisfactorily addressed. It is key for any corporation facing strategic resource allocation decisions, be it a pharmaceutical ?rm valuing and managing its pipeline of drugs, a telecom company having to select a set of technological alternatives, a venture capital or private equity ?rm investing in a portfolio of ventures, or any company allocating resources. Portfolios of real options typically interact such that the value of the whole differs from the sum of the separate parts. Thus one must address and value the particular con?guration of options embedded in a speci?c situation, taking into account the con?guration of other options already present in the portfolio, which in turn depends on the correlation struc ture among the various underlying assets and the strategic dependencies among the options themselves (e. g. , mutual exclusivity, strategic additiv ity, compoundness, complementarity etc. ). In that sense, optimal decisions also depend on past option exercise decisions by management and organi zational capabilities put in place in the past.
Author: Rainer Brosch
Publisher: Springer Science & Business Media
ISBN: 3540782990
Category : Business & Economics
Languages : en
Pages : 168
Get Book Here
Book Description
Valuing portfolios of options embedded in investment decisions is arguably one of the most important and challenging problems in real options and corporate ?nance in general. Although the problem is common and vitally important in the value creation process of almost any corporation, it has not yet been satisfactorily addressed. It is key for any corporation facing strategic resource allocation decisions, be it a pharmaceutical ?rm valuing and managing its pipeline of drugs, a telecom company having to select a set of technological alternatives, a venture capital or private equity ?rm investing in a portfolio of ventures, or any company allocating resources. Portfolios of real options typically interact such that the value of the whole differs from the sum of the separate parts. Thus one must address and value the particular con?guration of options embedded in a speci?c situation, taking into account the con?guration of other options already present in the portfolio, which in turn depends on the correlation struc ture among the various underlying assets and the strategic dependencies among the options themselves (e. g. , mutual exclusivity, strategic additiv ity, compoundness, complementarity etc. ). In that sense, optimal decisions also depend on past option exercise decisions by management and organi zational capabilities put in place in the past.
Author: Prasad Kodukula
Publisher: J. Ross Publishing
ISBN: 9781932159431
Category : Business & Economics
Languages : en
Pages : 256
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Book Description
Business leaders are frequently faced with investment decisions on new and ongoing projects. The challenge lies in deciding what projects to choose, expand, contract, defer, or abandon, and which method of valuation to use is the key tool in the process. This title presents a step-by-step, practical approach to real options valuation to make it easily understandable by practitioners as well as senior management. This systematic approach to project valuation helps you minimize upfront investment risks, exercise flexibility in decision making, and maximize the returns. Whereas the traditional decision tools such as discounted cash flow/net present value (DCF/NPV) analysis assume a “fixed” path ahead, real options analysis offers more flexible strategies. Considered one of the greatest innovations of modern finance, the real options approach is based on Nobel-prize winning work by three MIT economists, Fischer Black, Robert Merton, and Myron Scholes.
Author: Martha Amram
Publisher: Oxford University Press on Demand
ISBN: 9780875848457
Category : Business & Economics
Languages : en
Pages : 246
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Book Description
Using real-world examples and clear case studies, the authors provide investors and managers with an innovative method for assessing a company's non-financial assets, allowing them to assess opportunities whose financial rewards are less than certain.
Author: Lenos Trigeorgis
Publisher: MIT Press
ISBN: 9780262201025
Category : Business & Economics
Languages : en
Pages : 452
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Book Description
Comprehensive in scope, Real Options reviews current techniques of capital budgeting and details an approach (based on the pricing of options) that provides a means of quantifying the elusive elements of managerial flexibility in the face of unexpected changes in the market. In the 1970s and the 1980s, developments in the valuation of capital-investment opportunities based on options pricing revolutionized capital budgeting. Managerial flexibility to adapt and revise future decisions in order to capitalize on favorable future opportunities or to limit losses has proven vital to long-term corporate success in an uncertain and changing marketplace. In this book Lenos Trigeorgis, who has helped shape the field of real options, brings together a wealth of previously scattered knowledge and research on the new flexibility in corporate resource allocation and in the evaluation of investment alternatives brought about by the shift from static cash-flow approaches to the more dynamic paradigm of real options—an approach that incorporates decisions on whether to defer, expand, contract, abandon, switch use, or otherwise alter a capital investment. Comprehensive in scope, Real Options reviews current techniques of capital budgeting and details an approach (based on the pricing of options) that provides a means of quantifying the elusive elements of managerial flexibility in the face of unexpected changes in the market. Also discussed are the strategic value of new technology, project interdependence, and competitive interaction. The ability to value real options has so dramatically altered the way in which corporate resources are allocated that future textbooks on capital budgeting will bear little resemblance to those of even the recent past. Real Options is a pioneer in this area, coupling a coherent picture of how option theory is used with practical insights in into real-world applications.
Author: Jeffrey J. Reuer
Publisher: Emerald Group Publishing
ISBN: 1849504946
Category : Business & Economics
Languages : en
Pages : 520
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Book Description
Examines the ways in which real options theory can contribute to strategic management. This volume offers conceptual pieces that trace out pathways for the theory to move forward and presents research on the implications of real options for strategic investment, organization, and firm performance.
Author: Marion A. Brach
Publisher: John Wiley & Sons
ISBN: 0471445568
Category : Business & Economics
Languages : en
Pages : 384
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Book Description
Explores real option theory applied in practice Real options are quickly becoming the valuation and decision-making method of choice for many companies, including oil and gas companies, utilities and natural resource companies, pharmaceutical and biotech companies, Internet companies, and many others. Real Options in Practice allows readers to view the world of real options from the vantage point of a corporate practitioner applying real option valuation techniques on a regular basis. Expert Marion Brach describes the challenges of implementing a real option framework in practice within a corporate setting. Touching on the real options most firms care about, Real Options in Practice identifies the classic types of real options-deferral, abandonment, switching, expansion, and compound-and explores the main concepts critical to understanding real option theory. Through Brach's own three-step real option valuation method readers will learn how the theory of real options is now being applied to drive better, more profitable corporate decision-making. Marion A. Brach, MD, MBA (Hagen, Germany), has undertaken financial valuation of business opportunities and acquisitions using scenario and real option valuation in the biotech industry. A recognized expert on real option theory and practice, Brach received her MBA from the Manchester Business School and frequently speaks at real option seminars.
Author: Eduardo S. Schwartz
Publisher: MIT Press
ISBN: 9780262693189
Category : Business & Economics
Languages : en
Pages : 890
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Book Description
The study of investment under uncertainty was stagnant for several decades until developments in real options revitalized the field. The topics covered in this book include the reasons behind the under-investment programme.
Author: Sydney Howell
Publisher: Financial Times/Prentice Hall
ISBN: 9780273653028
Category : Analyse financière
Languages : en
Pages : 0
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Book Description
Will provide the reader with a comprehensive understanding of the concepts behind real option analysis and how to use them. It demystifies the scientific aura surrounding the subject, giving the reader the understanding necessary to direct or apply real option analysis in any organizational setting.
Author: M. Thomsett
Publisher: Springer
ISBN: 1137322268
Category : Business & Economics
Languages : en
Pages : 297
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Book Description
An advanced strategic approach using options to reduce market risks while augmenting dividend income, this title moves beyond the basics of stocks and options. It shows how the three major segments (stocks, dividends, and options) are drawn together into a single and effective strategy to maximize income while eliminating market risk.
Author: Lenos Trigeorgis
Publisher: Praeger
ISBN: 0275946169
Category : Business & Economics
Languages : en
Pages : 0
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Book Description
This compilation integrates various new contributions to the growing real options literature. Recent developments in the valuation of capital investment opportunities seen as real options (e.g. to defer, expand, abandon, or switch) have provided the tools and unlocked the possibilities to revolutionize the field of capital budgeting. The resulting insights, strategies, and techniques enable quantifying the thus far elusive elements of managerial operating flexibility and strategic interactions. These are vital to successfully capitalize on favorable future investment opportunities or limit losses from adverse market developments. This book presents various models and operating strategies, and a variety of applications ranging from acquisitions and divestitures, to natural resource development and pollution compliance. It is intended for both the academic and the professional market. The book's contributions are divided into five parts, covering sections on real options and alternative valuation paradigms for capital investment analysis; on the analysis of general exchange or switching options, and interdependencies among multiple such options; on strategic acquisitions, infrastructure, and foreign investment options; on mean reversion/ alternative formulations in natural resource investments, shipping, and start-up ventures; and on other applications in pollution compliance, land development, flexible manufacturing, and financial default options. Both academic and practitioner interest in these developments is unusually high. The book can serve as supplementary material for the academic market, e.g., in advanced finance courses in option pricing or capital budgeting, in doctoral seminars, and as a library resource. It may also be of interest to the professional market (e.g. corporate planners and finance executives in the oil, pharmaceutical, auto and a variety of other industries), academics from related areas (e.g. decision analysts or economists), as well as to international readers (academics, doctoral students, and professionals).
