Valuation of the Liability Structure by Real Options PDF Download

Author: David Heller
Publisher: John Wiley & Sons
ISBN: 1119988306
Category : Business & Economics
Languages : en
Pages : 127

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Book Description
The valuation of the liability structure can be determined by real options because the shares of a company can be regarded as similar to the purchase of a financial call option. Therefore, from this perspective, debt can be viewed as the sale of a financial put option. As a result, financial analysts are able to establish different valuations of a company, according to these two financing methods. Valuation of the Liability Structure by Real Options explains how the real options method works in conjunction with traditional methods. This innovative approach is particularly suited to the valuation of companies in industries where an underlying asset has high volatility (such as the mining or oil industries) or where research and development costs are high (for example, the pharmaceutical industry). Integration of the economic value of net debt (rather than the accounting value) and integration of the asset volatility are the main advantages of this approach.

Author: David Heller
Publisher:
ISBN:
Category : Investment analysis
Languages : en
Pages : 0

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Book Description
Valuation of the Liability Structure by Real Options explains how the real options method works in conjunction with traditional methods. --

Author: Irwin T. Vanderhoof
Publisher: Springer Science & Business Media
ISBN: 1475767323
Category : Business & Economics
Languages : en
Pages : 389

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Book Description
This book explores theoretical and practical implications of reflecting the fair value of liabilities for insurance companies. In addition, the contributions discuss the disclosure of these values to the financial and regulatory communities and auditing firms which are actually calculating this illusive but important variable. It combines contributions by distinguished practitioners from the insurance, accounting and finance fields, with those of prominent academics. One of the central themes of the collection is that adequate disclosure of the true economic value of insurance company liabilities is both possible and desirable. Wherever possible, the insurance valuation process is wedded with modern financial theory. For example, the use of option pricing theory is applied to insurance companies, where the true value of the firm's liabilities is a critical variable. Methods such as cash flow, earned profit and indirect discount are explored.

Author: Dean Paxson
Publisher: Elsevier
ISBN: 0080497977
Category : Business & Economics
Languages : en
Pages : 345

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Book Description
Real R&D options are among the earliest modelled real options, with now ten primary practical uses: general R&D planning, planning R&D in stages, evaluating test information, new product development timing, operations, abandonment, risk sharing, market funding, industry strategy and regulation. This book was partly motivated by requests to identify and develop real option models for R&D in telecommunications, petroleum technology and biotechnology. Nine new models cover information and implementation costs, analytical solutions for mean reverting, or fat tailed revenues, endogenous learning and exogenous and experiential shocks, American sequential options, and innovator advantages. Four new applications include forward start development options, exploration options, innovation with information costs, and innovator's real values with changing market share. R&D directors and researchers will find several uses for these models: - general R&D planning - evaluating test information - new product development timing - risk sharing - industry strategy and regulation - A practical guide to how organizations can use Real Option techniques to effectively value research and development by companies - Provides a rigorous theoretical underpinning of the use of Real Option techniques - Real Options applications are orientated around the economies of North America, Europe and Asia, for an international perspective

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: Dean Paxson
Publisher: Butterworth-Heinemann
ISBN: 9780750653329
Category : Business & Economics
Languages : en
Pages : 356

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Book Description
This text addresses a wide range of issues in valuation using the Real Options technique. It covers the whole area of Real Options and looks closely at developments, especially in valuing technology companies. Authors in Europe, North and South America, Asia and Africa provide seven Real Options models and applications.

Author: Mayank Gupta
Publisher: LAP Lambert Academic Publishing
ISBN: 9783844310030
Category :
Languages : en
Pages : 76

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Book Description
This monograph attempts to present an in-depth analysis about the obstacles involved with the implementation of Real Options valuation technique, for making investment decisions under uncertain business environment. The model traces back its origin from the famed Black&Scholes (1973) model for option valuation, for financial assets. However recently a lot of academicians have made several attempts to use the same model, for valuing options which are inherently embedded within projects that firms undertake, thereby allowing firms (managers) to make informed investment decisions, by capturing the value of new information and managerial flexibility, during the various stages of the project. However it needs to be examined carefully, that the Black&Scholes model for option volatility, is based on certain assumptions, which if violated cannot correctly price the value of a european call option. This monograph by using a case study method attempts to demonstrate the problems associated with the implementation of Real Options valuation technique, for valuing R&D projects in Pharmaceutical industry.

Author: Marie Lambert
Publisher:
ISBN:
Category :
Languages : en
Pages : 42

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Book Description
In this paper we develop a novel valuation model and methodology to value a pharmaceutical R&D project based on real options approach. The real options approach enables the possibility of optimally abandon the project before completion whenever the investment cost turns out to be larger than the expected net cash flow stream. On the other hand, the proposed model accounts for two different sources of uncertainty, those are technical and economic risk. This model incorporates a novel economic state vector where each economic state captures the interaction among different market and economic forces using Fourier series as the particular basis for the economic function space. In this sense, Fourier series are considered as an aggregate of forces playing a relevant role in the process evolution determining the cash flow structure and also allowing us to properly define an economic scenario where the project will be developed.

Author: Marcus Schulmerich
Publisher: Springer Science & Business Media
ISBN: 3642126626
Category : Business & Economics
Languages : en
Pages : 400

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Book Description
After the ?rst edition of this book was published in early 2005, the world has changed dramatically and at a pace never seen before. The changes that - curred in 2008 and 2009 were completely unthinkable two years before. These changes took place not only in the Finance sector, the origin of the crisis, but also, as a result, in other economic sectors like the automotive sector. Governments now own substantial parts, if not majorities, in banks or other companies which recorded losses of double digit billions of USD in 2008. 2008 saw the collapse of leading stand-alone U. S. investment banks. In many co- tries interest rates fell close to zero. What has happend? While the economy showed strong growth in 2004 to 2006, the Subprime or Credit Crisis changed the picture completely. What started in the U. S. ho- ing market in late 2006 became a full-?edged global ?nancial crisis and has a?ected ?nancial markets around the world. A decline in U. S. house prices and increasing interest rates caused a higher rate of subprime mortgage delinqu- cies in the U. S. and, due to the wide distribution of securitized assets, had a negative e?ect on other markets. As a result, markets realized that risks had been underestimated and volatility increased. This development culminated in the bankruptcy of the investment bank Lehman Brothers in mid September 2008.

Author: Aswath Damodaran
Publisher: FT Press
ISBN: 0137036558
Category : Business & Economics
Languages : en
Pages : 604

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Book Description
Renowned valuation expert Aswath Damodaran reviews the core tools of valuation, examines today’s most difficult estimation questions and issues, and then systematically addresses the valuation challenges that arise throughout a firm’s lifecycle in The Dark Side of Valuation: Valuing Young, Distressed and Complex Businesses. In this thoroughly revised edition, he broadens his perspective to consider all companies that resist easy valuation, highlighting specific types of hard-to-value firms, including commodity firms, cyclical companies, financial services firms, organizations dependent on intangible assets, and global firms operating diverse businesses. He covers the entire corporate lifecycle, from “idea” and “nascent growth” companies to those in decline and distress, and offers specific guidance for valuing technology, human capital, commodity, and cyclical firms. ·