Synopses & Reviews
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).
Synopsis
A nation's culture and structure influence both the type and degree of innovation achievable within its society. Examines and discusses the latest developments in the valuation of capital investment opportunities.
Synopsis
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.
Description
Includes bibliographical references (p. [323]-345) and indexes.
About the Author
LENOS TRIGEORGIS is currently Associate Professor of Finance at the University of Cyprus.
Table of Contents
Preface
Real Options: An Overview by Lenos Trigeorgis
Real Options and Alternative Valuation Paradigms
Methods for Evaluating Capital Investment Decisions under Uncertainty by Elizabeth Olmsted Teisberg
Merging Finance Theory and Decision Analysis by Eero Kasanen and Lenos Trigeorgis
The Strategic Capital Budgeting Process: A Review of Theories and Practice by Van Son Lai and Lenos Trigeorgis
General Exchange or Switching Options and Option Interdependencies
The Value of Flexibility: A General Model of Real Options by Nalin Kulatilaka
The Valuation of American Exchange Options with Application to Real Options by Peter Carr
Operating Flexibilities in Capital Budgeting: Substitutability and Complementarity in Real Options by Nalin Kulatilaka
Strategy, Infrastructure, and Foreign Investment Options
The Value of Options in Strategic Acquisitions by Kenneth W. Smith and Alexander J. Triantis
Corporate Governance, Long-term Investment Orientation, and Real Options in Japan by Takato Hiraki
Volatile Exchange Rates and the Multinational Firm: Entry, Exit, and Capacity Options by Gregory K. Bell
Mean Reversion/Alternative Formulations in Natural Resources, Shipping, and Start-Up Ventures
The Effects of Reversion on Commodity Projects of Different Length by David G. Laughton and Henry D. Jacoby
Contingent Claims Evaluation of Mean-Reverting Cash Flows in Shipping by Petter Bjerksund and Steinar Ekern
Valuing Start-up Venture Growth Options by Ram Willner
Other Applications in Pollution Compliance, Land Development, Flexible Manufacturing, and Financial Default
Investment in Pollution Compliance Options: The Case of Georgia Power by Michael E. Edleson and Forest L. Reinhardt
Optimal Land Development by Laura Quigg
Multiproduct Manufacturing with Stochastic Input Prices and Output Yield Uncertainty by Bardia Kamrad and Ricardo Ernst
Default Risk in the Contingent Claims Model of Debt by Anne Fremault Vila and Martha Amram Schary