Investment Decision-Making Using Optional Models.

Cover -- Half-Title Page -- Title Page -- Copyright Page -- Contents -- Introduction -- 1. Risk and Flexibility Integration in Valuation -- 1.1. Introduction -- 1.2. The scope of real options -- 1.2.1. The concept of real options -- 1.2.2. Empirical use of real options -- 1.2.3. Paradigms in options -- 1.3. Valuation of investments by real options -- 1.3.1. Optional valuation of investments in a discrete-time approach -- 1.3.2. Optional valuation of investments in a continuous-time approach -- 1.4. Option model extensions by incorporating new parameters (Levyne and Sahut 2008) -- 1.4.1. Stochastic volatility -- 1.4.2. Transaction costs and models with jumps -- 1.4.3. Option pricing -- 1.5. Conclusion -- 2. Optional Modeling of Investment Choices and Surplus Value Linked to the Option to Invest -- 2.1. Introduction -- 2.2. Framework of optional interactions and option to develop an investment project -- 2.2.1. Real investment opportunity -- 2.2.2. Opportunity to postpone decision-making to infinity -- 2.2.3. Development cycle and taking into account new information within dependent projects and focusing on research and development -- 2.3. Option to exchange and abandon an investment project -- 2.3.1. Real options within the replacement cycle and disinvestment alternatives -- 2.3.2. The value of an investment project in the natural resources sector -- 2.3.3. Valuation of the abandonment option by investors -- 2.4. Growth option resulting from investment decisions and acquisition strategies -- 2.4.1. Company profiles justifying growth option value -- 2.4.2. Growth option value related to interactions between financing and investment decisions -- 2.4.3. Acquisition strategies by the real options approach -- 2.5. Conclusion -- 3. Data Generation Applied to Strategic and Operational Option Models -- 3.1. Introduction.

3.2. Determining the right time to invest -- 3.2.1. Application to the carry option -- 3.2.2. Application of the Dixit and Pindyck model -- 3.3. Flexibility of asset exchange, abandonment and temporary shutdown of projects -- 3.3.1. Application to the exchange option -- 3.3.2. Application to the abandonment option -- 3.3.3. Application to the temporary shutdown option -- 3.4. Incorporation of development phases -- 3.4.1. Implementation of a two-stage investment project -- 3.4.2. Valuation of a sequential project -- Conclusion -- Appendices -- Appendix 1: Demonstration of the CRR Formula -- Appendix 2: Stochastic Differential Calculus -- A2.1. Introduction to the diffusion process -- A2.2. Simple Brownian motion or Wiener process -- A2.3. Brownian motion with tendency -- A2.4. Ito process and the special case of geometric Brownian motion -- A.2.5. Ito's lemma -- A2.6. Log-normal distribution of the stock price -- Appendix 3: Test of the Black and Scholes Formula and Return on the Log-Normal Distribution -- A3.1. Monte Carlo simulations and test of the Black and Scholes formula -- A3.2. Return on the normal-log distribution -- Appendix 4: Demonstration of the Black and Scholes Formula -- Bibliography -- Index -- Other titles from iSTE in Innovation, Entrepreneurship and Management -- EULA.

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Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2024. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.