Real Options and Investment Under Uncertainty PDF Download

Author: Eduardo S. Schwartz
Publisher: MIT Press
ISBN: 9780262693189
Category : Business & Economics
Languages : en
Pages : 890

View

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: Robert K. Dixit
Publisher: Princeton University Press
ISBN: 1400830176
Category : Business & Economics
Languages : en
Pages : 484

View

Book Description
How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.

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

View

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: David Geltner
Publisher: John Wiley & Sons
ISBN: 1119106494
Category : Business & Economics
Languages : en
Pages : 260

View

Book Description
Provides a revolutionary conceptual framework and practical tools to quantify uncertainty and recognize the value of flexibility in real estate development This book takes a practical "engineering" approach to the valuation of options and flexibility in real estate. It presents simple simulation models built in universal spreadsheet software such as Microsoft Excel®. These realistically reflect the varying and erratic sources of uncertainty and price dynamics that uniquely characterize real estate. The text covers new analytic procedures that are valuable for existing properties and enable a new, more profitable perspective on the planning, design, operation, and evaluation of large-scale, multi-phase development projects. The book thereby aims to significantly improve valuation and investment decision making. Flexibility and Real Estate Valuation under Uncertainty: A Practical Guide for Developers is presented at 3 levels. First, it introduces and explains the concepts underlying the approach at a basic level accessible to non-technical and non-specialized readers. Its introductory and concluding chapters present the important “big picture” implications of the analysis for economics and valuation and for project design and investment decision making. At a second level, the book presents a framework, a roadmap for the prospective analyst. It describes the practical tools in detail, taking care to go through the elements of the approach step-by-step for clarity and easy reference. The third level includes more technical details and specific models. An Appendix discusses the technical details of real estate price dynamics. Associated web pages provide electronic spreadsheet templates for the models used as examples in the book. Some features of the book include: • Concepts and tools that are simple and accessible to a broad audience of practitioners; • An approach relevant for all development projects; • Complementarity with the author's Commercial Real Estate Analysis & Investments—the most-cited real estate investments textbook on the market. Flexibility and Real Estate Valuation under Uncertainty: A Practical Guide for Developers is for everyone studying or concerned with the implementation of large-scale or multi-phase real estate development projects, as well as property investment and valuation more generally.

Author: Jeffrey J. Reuer
Publisher: Emerald Group Publishing
ISBN: 1849504946
Category : Business & Economics
Languages : en
Pages : 520

View

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: Martha Amram
Publisher: Oxford University Press on Demand
ISBN: 9780875848457
Category : Business & Economics
Languages : en
Pages : 246

View

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: Robert S. Pindyck
Publisher: World Bank Publications
ISBN:
Category : Capital investments
Languages : en
Pages : 58

View

Book Description
Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.

Author: Francois Trahan
Publisher: John Wiley & Sons
ISBN: 1118134095
Category : Business & Economics
Languages : en
Pages : 228

View

Book Description
Macroeconomic Investment Strategies for an Era of Economic Uncertainty “Over the years, François’ insightful analyses of the business cycle has led to market calls that have both benefitted investors on the upside and (more important to many) protected them from losses on the downside. François’ incredible track record in successfully interpreting the trends that can be found in leading indicators and other macroeconomic data have also led to his well deserved reputation as an expert in sector rotation - providing investors on both the long and short side of the market opportunities to profit from his ideas. In my opinion, his most important and influential macro prediction to date was his call in the middle of the last decade when he predicted that the worst housing crisis in American history would soon be upon us, and that it would have far-ranging implications for both the global economy and world financial markets.”

Author: Ian C. MacMillan
Publisher: Pearson Prentice Hall
ISBN: 0132716011
Category : Business & Economics
Languages : en
Pages : 177

View

Book Description
“This book is a must for any Business Development Manager, Corporate Strategist, R&D Director, and anyone else who is accountable for growth in a corporation. It is an easy read that is practical and not fraught with useless academic theories.” Ron Pierantozzi, Ph.D., CEO of PPT Research and Former Director, Business Development, Air Products & Chemicals, Inc. A Breakthrough Approach to Investing in Business Innovation Most companies analyze investments using tools that bias them against real innovation and lead them to avoid their best opportunities. This book introduces a breakthrough alternative: Opportunity Engineering. Drawing upon recent advances in financial analysis, but without requiring a lot of math, the authors show how to engineer the risk out of uncertain opportunities so you can pursue more high-payoff innovations. You’ll learn how to escape from the “go/no-go vise” and implement more flexible decision-making that considers all the business alternatives, models, and opportunities associated with each project. You’ll learn how to systematically structure high-potential projects to limit downside exposure and boost your potential upside. The authors show how to define the scope of investment opportunities, identify key drivers of potential profits, document assumptions, design out major risks, and tease out key challenges and vulnerabilities. Using these techniques, you can escape the mindset that limits you to low-impact innovations and begin pursuing serious growth opportunities--and make business uncertainty work for you, not against you. Why companies avoid their best opportunities for innovation Getting past risk-averse analysis that snuffs out experimentation and innovation Systematically engineering your opportunities Capturing the upside, slicing out the downside Beyond rigid “go/no-go” decisions How flexible, staged innovation creates more opportunities for delivering value Constructing an engineered growth portfolio of innovation investments Optimizing your mix of core-enhancing investments and high potential “long shots”

Author: Haim Levy
Publisher: Springer Science & Business Media
ISBN: 0387293116
Category : Business & Economics
Languages : en
Pages : 439

View

Book Description
This book is devoted to investment decision-making under uncertainty. The book covers three basic approaches to this process: the stochastic dominance approach; the mean-variance approach; and the non-expected utility approach, focusing on prospect theory and its modified version, cumulative prospect theory. Each approach is discussed and compared. In addition, this volume examines cases in which stochastic dominance rules coincide with the mean-variance rule and considers how contradictions between these two approaches may occur.