Log in

Relevant bibliographies by topics / Real option theory (ROT) / Journal articles

Journal articles on the topic 'Real option theory (ROT)'

To see the other types of publications on this topic, follow the link: Real option theory (ROT).

Author: Grafiati

Published: 14 March 2023

Create a spot-on reference in APA, MLA, Chicago, Harvard, and other styles

Select a source type:

Consult the top 50 journal articles for your research on the topic 'Real option theory (ROT).'

Next to every source in the list of references, there is an 'Add to bibliography' button. Press on it, and we will generate automatically the bibliographic reference to the chosen work in the citation style you need: APA, MLA, Harvard, Chicago, Vancouver, etc.

You can also download the full text of the academic publication as pdf and read online its abstract whenever available in the metadata.

Browse journal articles on a wide variety of disciplines and organise your bibliography correctly.

1

Rocha, Milena De Cássia, Márcio Augusto Gonçalves, and Yuri Lawryshyn. "Evolution of studies on Real Options Theory in health sector." Revista Gestão & Tecnologia 20, no. 4 (November 24, 2020): 227–44. http://dx.doi.org/10.20397/2177-6652/2020.v20i4.1990.

Full text

Abstract:

Objective: The objective of this study was to identify the evolution of studies of real options theory in the health sector. For that, the present paper presents a study, which aims to analyze the studies published on the main scientific bases.Methodology/approach – A bibliometric study was developed. Articles published in: Plubmed, Wiley Online Library, Sage, Web of Science, Science Direct, Springer Link and Emerald Insight were analyzed. Data were analyzed using descriptive statisticsOriginality / Relevance: The originality and relevance is to present an analysis on the evolution of the studies of the theory of real options in the health sector already published.Main Results: The main conclusion is that the application of ROT in the health sector is not only in the evaluation of investment, but also has been observed its applicability in medical decision making. In addition, we note that the first study on real options theory in the health sector was conducted eleven years after the start of studies on real options theory. Moreover, the option to defer is the most applied in the health sector.Theoretical Contributions:This study contributes to scientific research in Applied Social Sciences by presenting an evaluation of the evolution of studies in the health sector.

APA, Harvard, Vancouver, ISO, and other styles

2

Vimpari, Jussi, and Seppo Junnila. "Valuing green building certificates as real options." Journal of European Real Estate Research 7, no. 2 (July 29, 2014): 181–98. http://dx.doi.org/10.1108/jerer-06-2013-0012.

Full text

Abstract:

Purpose – The purpose of this study is first to evaluate whether real options analysis (ROA) is suitable for valuing green building certificates, and second to calculate the real option value of a green certificate in a typical office building setting. Green buildings are demonstrated as one of the most profitable climate mitigation actions. However, no consensus exists among industry professionals about how green buildings and specifically green building certificates should be valued. Design/methodology/approach – The research design of the study involves a theoretical part and an empirical part. In the theoretical part, option characteristics of green building certificates are identified and a contemporary real option valuation method is proposed for application. In the empirical part, the application is demonstrated in an embedded multiple case study design. Two different building cases (with and without green certificate) with eight independent cash flow valuations by eight industry professionals are used as data set for eight valuation case studies and analyses. Additionally, cross-case analysis is executed for strengthening the analysis. Findings – The paper finds that green certificates have several characteristics similar to real options and supports the idea of using ROA in valuing a green certificate. The paper also explains how option pricing theory and discounted cash flow (DCF) method deal with uncertainty and what shortcomings of DCF could be overcome by ROA. The results show that a mean real option value of 985,000 (or 8.8 per cent premium to the mean property value) was found for a Leadership in Energy and Environmental Design Platinum certificate in the Finnish property market. The main finding of the paper suggests that the contemporary real option valuation methods are appropriate to assess the monetary value and the uncertainty of a green building certificate. Originality/value – This is the first study to argue that option-pricing theory can be used for valuing green building certificates. The identification of the option characteristics of green building certificates and demonstration of the ROA in an empirical case makes questions whether the current mainstream investment analysis approaches are the most suitable methods for valuing green building certificates.

APA, Harvard, Vancouver, ISO, and other styles

3

Baldi, Francesco, and Lenos Trigeorgis. "Valuing human capital career development: a real options approach." Journal of Intellectual Capital 21, no. 5 (May 19, 2020): 781–807. http://dx.doi.org/10.1108/jic-06-2019-0134.

Full text

Abstract:

PurposeThere has been a long controversy in the literature on assessing the value of human capital – a long-sought but elusive and challenging task. The ability to quantify flexible human capital (FHC) has been a shortcoming in extant literature. We make a meaningful contribution by showing how real options (RO) methodology can be used to quantify FHC and we provide complementary case study evidence from Fortune 500 “best companies to work for” that the value of employee career development is higher in more volatile sectors in line with real options theory (ROT).Design/methodology/approachThis article provides a prescriptive RO methodology for adopting a more flexible, staged SHRM organizational perspective suitable for uncertain environments, and explores its theoretical and empirical implications through the dual use of RO methodological modelling and multi-case study data involving ten Fortune 500 companies. The case study approach is aimed at creating managerially relevant knowledge. The relevance of our approach to managerial practice is shown through guidelines on how a company like Google might use the RO methodology to estimate the career development option value so as to inform its internal development program for employees to create and capture value.FindingsOur focus is on the staging flexibility in HR as exemplified by the internal career development process. This process can be viewed as a multi-stage (compound) option involving various types of HC uncertainty, HC options, and HR practices. We model staging HR deployment via the option to promote staff employees to middle-level management, itself embedding the option to rise to the top management. To empirically validate our valuation approach, we present case study research that enables quantifying the option value of a career development program and allows assessing how much a mismatch exists in a sample of ten public U.S. companies.Research limitations/implicationsThe overall staging quantification idea is important as it offers guidance as to how to value HR as a sequential investment process under uncertain demand or skill conditions. The analysis is limited to the extent that staged career development might interact with other types of human capital (e.g. switch and learning) options and HR practices (e.g. training). Human resources may also interact with other organizational intangibles, such as brand equity. Our analysis also does not account for psychological considerations from the employees' perspective, such organizational commitment facilitating trust to enable reciprocal commitments, which remains a fruitful subject for future extensions.Practical implicationsROT can provide useful guidance and tools for HR scholars and managers. By keeping tabs on HR-based flexibility value and focusing on the key input variables driving HR flexibility, HR managers can determine the flexibility value unleashed from staging the deployment of HC resources in the face of unanticipated demand and skills shifts.Originality/valueThis is the first paper that attempts to quantify the value of staged career development flexibility using the RO methodology. This article will be cited for its innovativeness in being the first to quantify the value of human capital's contribution to corporate value creation and provide objective evaluation in the context of organizational career-development programs. Besides providing useful insights to scholars, the article also demonstrates how the RO methodology can apply to actual companies and inform managerial practice offering guidelines of relevance to HR practitioners on how to quantify the value of staged HC development in an uncertain environment.

APA, Harvard, Vancouver, ISO, and other styles

4

Dos Santos, Luiz Otavio Schmall, Ednilson Bento Freire, Guilherme Pederneiras Raja Gabaglia, and Daniel Dargan Cordeiro. "Application of real option theory to quantify the impacts of high-resolution stratigraphy training." Rio Oil and Gas Expo and Conference 22, no. 2022 (September 26, 2022): 25–26. http://dx.doi.org/10.48072/2525-7579.rog.2022.025.

Full text

APA, Harvard, Vancouver, ISO, and other styles

5

Lamberts-Van Assche, Hanne, and Tine Compernolle. "Using Real Options Thinking to Value Investment Flexibility in Carbon Capture and Utilization Projects: A Review." Sustainability 14, no. 4 (February 12, 2022): 2098. http://dx.doi.org/10.3390/su14042098.

Full text

Abstract:

Carbon capture and utilization (CCU) is one of the key technologies that may help to reduce industrial emissions. However, the deployment of CCU is hampered by various barriers, including high levels of technical, policy and market uncertainty. The real options theory (ROT) provides a method to account for these uncertainties and introduce flexibility in the investment decision by allowing decisions to be changed in response to the evolution of uncertainties. ROT is already being applied frequently in the evaluation of renewable energy or carbon capture and storage (CCS) projects, e.g., addressing the uncertainty in the price of CO2. However, ROT has only found a few applications in the CCU literature to date. Therefore, this paper investigates the specific types of uncertainty that arise with the utilization of CO2, identifies the types of real options present in CCU projects and discusses the applied valuation techniques. Research gaps are identified in the CCU literature and recommendations are made to fill these gaps. The investment decision sequence for CCU projects is shown, together with the uncertainties and flexibility options in the CCU projects. This review can support the real options-based evaluations of the investment decisions in CCU projects to allow for flexibility and uncertainty.

APA, Harvard, Vancouver, ISO, and other styles

6

Caldas, Antônio Vinícius Silva, and Antônio Francisco De Almeida da Silva Júnior. "Comparative evaluation of investment analysis methods: an application in renewable energy auctions between 2011 e 2015." Revista de Administração da UFSM 14, no. 3 (October 4, 2021): 693–715. http://dx.doi.org/10.5902/1983465955255.

Full text

Abstract:

Purpose - This work aims to analyze the assertiveness of net present value (NPV) and real options theory (ROT), at the moment of decision making for investments in renewable energy projects, considering the 244 winning projects in the auctions of reserve energy that occurred between 2011 and 2015.Design/methodology/approach –This is a quantitative study that used real data from 150 wind power and 94 photovoltaic projects available on ANEEL´s website. For data analysis, the confusion matrix, the area under the ROC Curve and the Kappa Index were used.Findings – It was concluded that NPV is more effective for recommendations to invest in projects with chances to be successful, while ROT is more accurate in suggesting against investing in projects with propensity for failure. It was also found that the degree of agreement between the two techniques is substantial and determined by the level of volatility of real options.Research limitations/implications – The limitations of this study refer to the difficulties of identifying the reasons that motivated failures in the projects.Originality/value – Theoretically, this work contributes to identify the characteristics that effectively differentiate ROT from NPV at the time of decision making. Empirically, this work contributes to doing an ex-post analysis of the projects.

APA, Harvard, Vancouver, ISO, and other styles

7

Campher, Cedric Abraham, and PJ Vlok. "Building a scenario based active mapping investment tool within a physical asset management framework." South African Journal of Economic and Management Sciences 17, no. 2 (March 6, 2014): 194–206. http://dx.doi.org/10.4102/sajems.v17i2.478.

Full text

Abstract:

This study explores the implementation of an integrated capital budgeting visual mapping framework comprised of both Discounted Cash Flow (DCF) and Real Options Analysis (ROA) techniques. Physical asset investment decisions are based largely on rigid discounted cash flow tools which provide untimely and incomplete decisional criteria. While literature outlines the widespread use of traditional DCF techniques, it nevertheless reveals extensive limitations, including its static inflexibility and slow-to-evolve framework. ROA is a more recent valuation tool based on stock option theory. It brings into account added value found in the flexibility of managerial decision-making and uncertain conditions. This study implements a combined DCF and ROA capital budgeting tool within a Physical Asset Management (PAM) environment. The validity of the framework is realised through an industry-relevant case study presented by a South African mining company.

APA, Harvard, Vancouver, ISO, and other styles

8

Zandi, Faramak, Madjid Tavana, and Aidan O’Connor. "A STRATEGIC COOPERATIVE GAME-THEORETIC MODEL FOR MARKET SEGMENTATION WITH APPLICATION TO BANKING IN EMERGING ECONOMIES." Technological and Economic Development of Economy 18, no. 3 (October 1, 2012): 389–423. http://dx.doi.org/10.3846/20294913.2012.688072.

Full text

Abstract:

Market segmentation is essential to target efficaciously core-segment customers and to obtain a competitive advantage. Firms when confronted by the range of market segments, have difficulty in deciding the core-segment customers who are the most probable purchasers of their product and services. We propose a novel fuzzy group multi-criteria method for market entry and segment evaluation and selection. This proposed method provides a comprehensive and systematic framework that combines bi-level multi-objective optimization with real option analysis (ROA) and fuzzy cooperative n-person game theory. The contribution of the proposed segment evaluation and selection method is fivefold: (1) it addresses the gaps in the marketing literature on the efficacious and effective assessment of market segments; (2) it provides a comprehensive and systematic framework that combines bi-level multi-objective optimization with ROA and fuzzy cooperative n-person game theory; (3) it considers fuzzy logic and fuzzy sets to represent ambiguous, uncertain or imprecise information; (4) it does not insist on consensus but synthesizes a representative outcome based on qualitative judgments and quantitative data; and (5) it is applicable to national and international market segmentation. The practical application of this proposed framework illustrates the efficacy of the procedures and algorithms.

APA, Harvard, Vancouver, ISO, and other styles

9

Fontes MP, Koppe JC, and Silva Neto JA. "Analysis of the variables: Commodity price and discount rate on long-term open pit mine planning." Global Journal of Engineering and Technology Advances 6, no. 2 (February 28, 2021): 142–50. http://dx.doi.org/10.30574/gjeta.2021.6.2.0025.

Full text

Abstract:

Long-term open pit mine planning is a complex process which deals with numerous uncertainties, whether they are economical (commodity price, operational costs, production schedule, discount rate, inflation, among others); geological (grade distribution, density, hardness, etc); or physical constraints (property limits, environmental issues, legislation, etc). In this context, this paper aims to evaluate the effects of the variation of two important variables: commodity price and discount rate, with regard to the economic criterion, represented by the Net Present Value (NPV) of the mining business. Starting from a baseline value of US$ 80/t, the commodity (phosphate rock was used as a case study) price was varied within a 50% range, above and below the baseline value, obtained from historic values from the last 5 years. The discount rate values adopted in the analyses were 6%, 8%, 10%, 12%, 14%, 16%, 18% and 20%. The results showed increases in the market price yielded higher NPV and life of mine values. On the other hand, it was noted that increases in the discount rate can significantly alter the NPV, materially reducing the value of the mining undertaking. It is also worth noting that, in contrast to more robust approaches such as Real Options Theory (ROT), traditional Discounted Cash Flow (DCF) methods, such as NPV, assume variables, such as commodity price, to be fixed, which could either lead to the undervaluation or overvaluation of a project.

APA, Harvard, Vancouver, ISO, and other styles

10

Mintah, Kwabena. "International Real Estate Review." International Real Estate Review 21, no. 4 (December 31, 2018): 473–520. http://dx.doi.org/10.53383/100270.

Full text

Abstract:

Studies have demonstrated the potential of real options analysis (ROA) in property development decision-making. However, practitioners have yet to accept, adopt and integrate ROA in property development decision-making in Australia. This paper therefore investigates how Australian residential property developers manage uncertainties and risks, examines flexibility as a risk management tool, and evaluates the receptiveness and acceptance of ROA for decision making. Data are collected through face-to-face semi-structured interviews with twelve participants, and analysed by using thematic analysis. The results indicate that a discount rate is insufficient for managing uncertainties and risks; rather, contingency is used. Receptiveness and acceptance of the RO theory are mixed due to lack of unanimity among responses. Some participants are positive about flexibility, while others are dismissive. Beyond quantitative ROA models, the findings suggest that practitioners are receptive to ROA, but concerns remain over adoption. Flexibility cases executed by some participants in practice indicate that practitioners are subconsciously using ROA. Therefore, it is possible that acceptance and adoption could be achieved in the future. Evidence of the use of contingency as a risk management tool challenges the long-held notions of risk-return relationships in property development and investment. This is initial evidence of qualitative research on ROA in practice within Australian property developments.

APA, Harvard, Vancouver, ISO, and other styles

11

Rico-Ramirez, Vicente, Urmila M. Diwekar, and Benoit Morel. "Real option theory from finance to batch distillation." Computers & Chemical Engineering 27, no. 12 (December 2003): 1867–82. http://dx.doi.org/10.1016/s0098-1354(03)00160-1.

Full text

APA, Harvard, Vancouver, ISO, and other styles

12

Tortella, G., N. Durán, O. Rubilar, M. Parada, and M. C. Diez. "Are white-rot fungi a real biotechnological option for the improvement of environmental health?" Critical Reviews in Biotechnology 35, no. 2 (October 2013): 165–72. http://dx.doi.org/10.3109/07388551.2013.823597.

Full text

APA, Harvard, Vancouver, ISO, and other styles

13

Hajdini, Ilir, and Josef Windsperger. "Real options in franchise contracting: an application of transaction cost and real options theory." European Journal of Law and Economics 50, no. 2 (August 6, 2020): 313–37. http://dx.doi.org/10.1007/s10657-020-09665-3.

Full text

Abstract:

Abstract Previous research has not explained the use of real option clause in franchise contracting. The real option clause has two economic functions: To reduce transaction costs by mitigating opportunism risk and to increase strategic rents by exploiting the profit potential from future upside opportunities under uncertainty. We argue that franchisors will more likely use a real option clause (ROC) in franchise contracts under high behavioral uncertainty, high franchisors’ transaction-specific investments relative to franchisees’ and long contract duration. In addition, by combining transaction cost theory and real option theory, our study provides a new explanation for the impact of environmental uncertainty on the use of ROC in franchise networks by showing that there exists a U-shaped relationship between environmental uncertainty and the franchisor’s use of ROC. Overall, the data from German and Swiss franchise systems provide support of the research model.

APA, Harvard, Vancouver, ISO, and other styles

14

Chang, Eunmi, and Hyun Chin. "Pay-for-Performance as an HR Option - An Explanation of Real Option Theory -." korean management review 46, no. 1 (February 28, 2017): 315. http://dx.doi.org/10.17287/kmr.2017.46.1.315.

Full text

APA, Harvard, Vancouver, ISO, and other styles

15

Pellegrino, Roberta, Nevena Vajdic, and Nunzia Carbonara. "Real option theory for risk mitigation in transport PPPs." Built Environment Project and Asset Management 3, no. 2 (November 18, 2013): 199–213. http://dx.doi.org/10.1108/bepam-05-2012-0027.

Full text

APA, Harvard, Vancouver, ISO, and other styles

16

Chen, Liang`, Zhi Yan Liu, Kang Ren Huang, and Min Du. "Economic Evaluation Model of Grid Construction Project Based on Real Option Theory." Advanced Materials Research 1008-1009 (August 2014): 800–803. http://dx.doi.org/10.4028/www.scientific.net/amr.1008-1009.800.

Full text

Abstract:

This paper combined with the real conditions on investment and decision-making of grid construction. Considering the uncertainty of project, we applies real option theory into evaluation model of grid construction and establishes evaluation model of grid construction based on real option theory. The result indicates that proper application of real option method into the investment decision-making model of grid construction can better enable grid to obtain profit from investment uncertainty, which provides larger profit and opportunity for grid corporation.

APA, Harvard, Vancouver, ISO, and other styles

17

Chen, Jing. "An analytical theory of project investment: a comparison with real option theory." International Journal of Managerial Finance 2, no. 4 (October 2006): 354–63. http://dx.doi.org/10.1108/17439130610705535.

Full text

APA, Harvard, Vancouver, ISO, and other styles

18

Ying, Donglei. "Optimization of Tourism Real Estate Development Project Based on Option Premium Model." Discrete Dynamics in Nature and Society 2021 (August 18, 2021): 1–8. http://dx.doi.org/10.1155/2021/2954795.

Full text

Abstract:

Compared with that of traditional housing real estate, the development of tourism real estate is time-consuming, complex, and irreversible. It is hard to guide investment decision-making on tourism real estate with the conventional discount cash flow (DCF) method. This paper aims to demonstrate that the real option method can improve and optimize the investment decision-making on tourism real estate. Through case analysis, the real option model, i.e., the classic American real option model, and binary tree value distribution model were adopted to analyze the factors affecting the real option of tourism real estate, optimize the development sequence of tourism real estate project, and demonstrate the phased development value of tourism real state, thereby enhancing the development value of tourism real estate projects. The case analysis proves that tourism real estate investment is fully consistent with real option in the uncertain spatiotemporal attributes: uncertainty, irreversibility, and timeliness. Therefore, tourism real estate project carries obvious features of real option. The decision-making by the real option model is much more scientific and superior than that by the conventional DCF method. Since the application of real option theory has been emphasizing housing real estate over tourism real estate, the research results enrich the theory on real option-based investment decision-making for real estate and expand the application scope of real option.

APA, Harvard, Vancouver, ISO, and other styles

19

Horn, Anders, Frode Kjærland, Peter Molnár, and Beate Wollen Steen. "The use of real option theory in Scandinavia's largest companies." International Review of Financial Analysis 41 (October 2015): 74–81. http://dx.doi.org/10.1016/j.irfa.2015.05.026.

Full text

APA, Harvard, Vancouver, ISO, and other styles

20

Yuan, Fong-Ching. "Simulation–optimization mechanism for expansion strategy using real option theory." Expert Systems with Applications 36, no. 1 (January 2009): 829–37. http://dx.doi.org/10.1016/j.eswa.2007.10.031.

Full text

APA, Harvard, Vancouver, ISO, and other styles

21

Xue, Yong Gang, and Ming Li Zhang. "Valuing Research Investment Projects Based on Discrete Time Model: A Real Options Approach." Advanced Materials Research 926-930 (May 2014): 4073–76. http://dx.doi.org/10.4028/www.scientific.net/amr.926-930.4073.

Full text

Abstract:

The methodology is proposed to value a project based on real options model firstly. Then the BOPM is used to value a project and the empirical results are compared with the results which are based on NPV approach. The results favor the application of the real option theory and show that the option value have important role on investment decision. The results show that the real option approach is more rational than the traditional NPV approach in valuing project because the uncertainty is considered in real option approach. The uncertainty with respect to project return has a substantial effect on investment decision, which is only explained by the option theory.

APA, Harvard, Vancouver, ISO, and other styles

22

Da, Wu, and Wan Li Xing. "Study on the Application of Real Options in Coal Resources Investment." Advanced Materials Research 978 (June 2014): 265–71. http://dx.doi.org/10.4028/www.scientific.net/amr.978.265.

Full text

Abstract:

This paper uses the real options approach to conduct research on the coal resources development investment decision by literature studies, the combination of theoretical research and practical research. It has carried on the systematic overall retrospect to the domestic and international research results about real option. It introduces and analyzes the real option theory on the basis of analyzing and appraising to the traditional investment methods systematically in detail. This paper has studied the value of the investment project again with the real option theory. It sums up the application area, step and analyzing frame of real option theory, and analyzes the insufficiency of the traditional investment decision on the basis of comparing with traditional coal resource investment decision, and proposes some improvement suggestions.

APA, Harvard, Vancouver, ISO, and other styles

23

Li, Eric A. L. "Factors Affecting Delay Discounting—The Real Option Approach." International Journal of Psychological Studies 9, no. 2 (April 18, 2017): 96. http://dx.doi.org/10.5539/ijps.v9n2p96.

Full text

Abstract:

We study factors that can influence Delayed Reward Discounting (DRD) behavior from a novel approach based on economic theory. Real Option (RO) analysis shows that when a decision is irreversible, can be delayed and produces uncertain benefits, then future rewards will be discounted in a way that produces seemingly irrational behavior. In a factorial experimental survey, we asked college students how much they were willing to pay for a digital product when the above factors are involved. Results show that DRD behavior is significantly more manifest when the above factors are present than when absent. We proceeded to calculate the magnitude of this increased DRD behavior that is consistent with predictions from RO theory.

APA, Harvard, Vancouver, ISO, and other styles

24

Zhang, A. Lin, and Bao Xia Cui. "Delayed Development and Investment Decision Analysis in Real Estate Based on Real Option Theory." Applied Mechanics and Materials 71-78 (July 2011): 4576–79. http://dx.doi.org/10.4028/www.scientific.net/amm.71-78.4576.

Full text

APA, Harvard, Vancouver, ISO, and other styles

25

Zhao, Xue Ping, and Shui Cheng Tian. "Research Review on the Value of Coalmine Safety Investment Based on Real Option." Applied Mechanics and Materials 522-524 (February 2014): 1447–51. http://dx.doi.org/10.4028/www.scientific.net/amm.522-524.1447.

Full text

Abstract:

The paper focuses on coalmine safety investment, studies and summarizes theories of safety investment and real option. Based on real option applications on pricing, venture investment, investment decision, estimation and valuation, investment assessment and safety investment, it analyzes the problems in researches on coal mine safety investments and advantages of constructing pricing model that combined real option with fuzzy mathematics theory, and proposes research direction of incorporating fuzzy numbers into real option model.

APA, Harvard, Vancouver, ISO, and other styles

26

Yu, Si Qin, Bin Ji, and Jin Hai Chen. "Container Ship Investment Based on Real Option." Applied Mechanics and Materials 380-384 (August 2013): 4557–61. http://dx.doi.org/10.4028/www.scientific.net/amm.380-384.4557.

Full text

Abstract:

This study investigates liner companies' timing of investment and sealing up container ships based on real option theory. The Dixit model is adopted to find out a pair of trigger prices for entry and exit with the assumption freight rate obey Geometric Brownian Motion. More new ship-building orders and entrants lead to lower future freight rate in the oligopoly liner shipping market. This model is tested empirically basic on the data of a 9000 TEU container ship on Far East-Europe route and the result is positive comparing to the number of ship orders. Liner companies' should make decision base on the freight of the ship in operation. Therefore, ship investment should be made at the new ship order trough and freight trough.

APA, Harvard, Vancouver, ISO, and other styles

27

JANG, WON-JOON, and JEONG-DONG LEE. "THE APPLICATION OF REAL OPTIONS THEORY IN DEFENSE R&D PROJECTS: AN EIGHT-FOLD SEQUENTIAL COMPOUND OPTION MODEL." International Journal of Innovation and Technology Management 08, no. 01 (March 2011): 95–112. http://dx.doi.org/10.1142/s0219877011002179.

Full text

Abstract:

Today, despite the needs of more credible valuation models in defense research and development (R&D), defense decision makers mainly focus on previous cost and NPV-based approaches to evaluate them. Defense R&D projects should be considered as a sequential compound real option due to its relevant characteristics. This paper presents a real option valuation model with the use of an eight-fold compound option in the valuation of defense R&D projects and its illustrative application using a case study in the Republic of Korea. Compared to the traditional net present value (NPV) methods and their sensitivity analyses with value drivers, the paper shows the necessity of using real option approaches and their mindsets for defense decision makers to decide their defense R&D projects. The contribution of this paper is to present the real option framework in valuating of defense R&D projects, providing for the managerial flexibility with option mindsets. It also shows some limitations of using cost- and NPV-based approaches and presents real options valuation methods as its solution. The paper suggests some feasible defense policy implications that can be applied to the actual process of defense acquisition projects.

APA, Harvard, Vancouver, ISO, and other styles

28

Posza, Alexandra. "REAL OPTION ANALYSIS OF VENTURE CAPITAL INVESTMENTS." Balkans Journal of Emerging Trends in Social Sciences 3, no. 1 (June 30, 2020): 64–77. http://dx.doi.org/10.31410/balkans.jetss.2020.3.1.64-77.

Full text

Abstract:

Venture capital investments play an important role in the development and growth of start-up companies that are characterized by a high degree of uncertainty and growth potential, and venture capital is also one of the major sources of financing for entrepreneurial businesses. In the case of venture capital investment, staging has a huge potential, so the venture capitalists keep the right to participate in further financing rounds. The real option approach as an evaluation method provides an opportunity to evaluate this kind of investment with the help of flexibility in the case of a high degree of uncertainty. The paper puts the emphasis on the evaluation and the effectiveness of venture capital investments primarily from the aspect of real option theory tested on Hungarian venture capital cases. The paper concludes that the option-based valuation methods are more suitable for evaluating venture capital investments than others, especially the discounted cash flow method.

APA, Harvard, Vancouver, ISO, and other styles

29

Grenadier, Steven R. "OPTION EXERCISE GAMES: THE INTERSECTION OF REAL OPTIONS AND GAME THEORY." Journal of Applied Corporate Finance 13, no. 2 (June 2000): 99–107. http://dx.doi.org/10.1111/j.1745-6622.2000.tb00057.x.

Full text

APA, Harvard, Vancouver, ISO, and other styles

30

Kim, Yong Jin, and G. Lawrence Sanders. "Strategic actions in information technology investment based on real option theory." Decision Support Systems 33, no. 1 (May 2002): 1–11. http://dx.doi.org/10.1016/s0167-9236(01)00134-8.

Full text

APA, Harvard, Vancouver, ISO, and other styles

31

Courchane, Marsha, David Nickerson, and Richard Sullivan. "Investment in internet banking as a real option: theory and tests." Journal of Multinational Financial Management 12, no. 4-5 (October 2002): 347–63. http://dx.doi.org/10.1016/s1042-444x(02)00015-4.

Full text

APA, Harvard, Vancouver, ISO, and other styles

32

Yang, Zijuan, Ciwei Gao, and Ming Zhao. "The Optimal Investment Strategy of P2G Based on Real Option Theory." IEEE Access 8 (2020): 127156–66. http://dx.doi.org/10.1109/access.2019.2910259.

Full text

APA, Harvard, Vancouver, ISO, and other styles

33

Morreale, Azzurra, Luigi Mittone, Thi-Thanh-Tam Vu, and Mikael Collan. "To Wait or Not to Wait? Use of the Flexibility to Postpone Investment Decisions in Theory and in Practice." Sustainability 12, no. 8 (April 23, 2020): 3451. http://dx.doi.org/10.3390/su12083451.

Full text

Abstract:

Business sustainability and real options are closely connected, as real options are managerial flexibility that allows organizations to adapt to changes in their environment, thus making the organization more robust and economically sustainable. Studies in real options theory abound, yet there is still a lack of evidence on whether people make decisions consistently with the predictions made by real options models. We run a laboratory experiment to study the role of option value and the laboratory time required to resolve uncertainty in individuals’ decision to price and adopt an option to wait. Specifically, we compare decision makers’ choices in two investment scenarios: One with a short time to maturity (implying a low option value), and another with a longer time to maturity (implying a high option value). In the lab, both scenarios are implemented with the waiting time of twenty and sixty minutes. Our results show that decision makers deviate from the theoretical predictions, recognizing the benefit of waiting, when the value of the option is higher, or when the waiting time is shorter. Our study does not only bring more insights into real options adoption at the individual level, but also emphasizes the great potential of behavioral and experimental approach to bridge the gap between theory and practice in the real options literature.

APA, Harvard, Vancouver, ISO, and other styles

34

Van de Vijver, Anne, Danny Cassimon, and Peter-Jan Engelen. "A Real Option Approach to Sustainable Corporate Tax Behavior." Sustainability 12, no. 13 (July 3, 2020): 5406. http://dx.doi.org/10.3390/su12135406.

Full text

Abstract:

Aggressive tax planning has become a sustainability problem, as governments have to cope with less tax revenue, which is crucial for investments in sustainable development goals. The OECD and the EU authorities have taken several initiatives against aggressive tax planning, such as the Action Plan against BEPS. However, these initiatives lack effectiveness, and aggressive tax planning is still omnipresent. We analyze the fight against aggressive corporate tax planning from a Real Option Theory perspective, in order to find an explanation for the difficult shift of companies’ aggressive tax planning strategies to more sustainable tax behavior. The Real Option Theory shows that, as long as the option to ‘delay’ the investment in sustainable tax behavior has too much value because the benefits of such investment are uncertain, companies will wait. Based on this new understanding, we suggest additional public policy interventions against aggressive tax planning. These interventions aim directly at reducing this real option value (of waiting).

APA, Harvard, Vancouver, ISO, and other styles

35

Wang, Chao, Wei Liang, and Shou Qing Wang. "Real Option in Urban Rapid Rail Transit PPP Project." Applied Mechanics and Materials 505-506 (January 2014): 437–42. http://dx.doi.org/10.4028/www.scientific.net/amm.505-506.437.

Full text

Abstract:

To address a real issue in Beijing Urban Rail PPP project, an Excel model is built to solve the decision making problem of car park scale using real option theory. The model calculates the expected NPV of different options of building scale with real option embedded, avoiding the trouble of option pricing. The results show that real option can significantly optimize the decision making process of PPP projects. Especially when dealing with the problems raised by uncertainty in the process of negotiation, decision making and execution of a PPP project, real option can be more useful as it not only offers a way to improve the rationality of a decision, but also helps both of the private and the public sectors to reach an agreement.

APA, Harvard, Vancouver, ISO, and other styles

36

Moreno, Manuel, Javier F. Navas, and Federico Todeschini. "Land valuation using a real option approach." Revista de la Real Academia de Ciencias Exactas, Fisicas y Naturales. Serie A. Matematicas 103, no. 2 (September 2009): 405–20. http://dx.doi.org/10.1007/bf03191915.

Full text

APA, Harvard, Vancouver, ISO, and other styles

37

Gao, Xi-Rong, Jian Yang, and Wen-xuan Dong. "An Improved Real Option Pricing Model of Internet Asset." International Journal of Asian Business and Information Management 9, no. 2 (April 2018): 15–28. http://dx.doi.org/10.4018/ijabim.2018040102.

Full text

Abstract:

This article shows that against the neglect on Internet asset value in traditional financial accounting theory and practice, the authors proposed an improved real option model for assessing Internet asset value based on Metcalfe's law and adaptive expectation hypothesis, and used it to assess the Internet asset value of Tencent company. The results showed that the improved real option model can accurately assess the value of Internet asset, and the assessment result was extremely consistent with the result assessed by efficient market theory algorithm. The results also showed that Internet asset value played a predominate role in Internet enterprise overall value, and both the initial revenue growth and estimated time had a significant positive effect on Internet asset value, and long-term industry operation cost coefficient and short-term corporate operation cost coefficient had a significant negative effect on Internet asset value. The results indicated that cutting the cost or increasing the network users could promote the value of Internet asset.

APA, Harvard, Vancouver, ISO, and other styles

38

Hu, Wei, Kang Ren Huang, Zhi Yan Liu, and Min Du. "The Staged Decision Model of Key Grid Project: Based on the Real Option Theory." Advanced Materials Research 1008-1009 (August 2014): 827–30. http://dx.doi.org/10.4028/www.scientific.net/amr.1008-1009.827.

Full text

Abstract:

With the continuous development of electric power construction and electricity market reform, power grid investment are facing more and more uncertainties. As to the Key Project investment evaluation for grid, single stage evaluation model is too simple to make an appropriate decision, which overlooked the option value of the investment project. Therefore, in view of the periodical characteristics of investment decision-making process of the grid company’s key project, this article based on the real option analysis methods, and divide the power grid’s key projects into multiple stage according to time sequence, to evaluate each stage’s option value, and to determine the overall value of the grid company’s key investment projects, which has also provided an new train? of thought for the assessment of risk investment projects.

APA, Harvard, Vancouver, ISO, and other styles

39

Huang, Jian-bai, Na Tan, and Mei-rui Zhong. "Incorporating Overconfidence into Real Option Decision-Making Model of Metal Mineral Resources Mining Project." Discrete Dynamics in Nature and Society 2014 (2014): 1–11. http://dx.doi.org/10.1155/2014/232516.

Full text

Abstract:

As for uncertainties and decision-makers’ overconfidence psychological bias, overconfidence has been incorporated into real option decision-making model of metal mineral resources mining to estimate its effect on decision-making of the project and thus a behavioral real option decision-making model of metal mineral resources mining based on overconfidence has been established. Furthermore, numerical simulation and sensitivity analysis have been conducted to verify the practicality of the model. Results show that model in this paper has greatly changed trigger value and option value of mineral resources mining project compared with traditional real option model, thus greatly changing optimal decision results. Incorporating overconfidence into real option decision-making model of metal mineral resources development is a crucial extension of project evaluation theory.

APA, Harvard, Vancouver, ISO, and other styles

40

Slade, Margaret E. "Valuing Managerial Flexibility: An Application of Real-Option Theory to Mining Investments." Journal of Environmental Economics and Management 41, no. 2 (March 2001): 193–233. http://dx.doi.org/10.1006/jeem.2000.1139.

Full text

APA, Harvard, Vancouver, ISO, and other styles

41

Cucchiella, Federica, and Massimo Gastaldi. "Real Option Approach for the Management of a New Product Development in the Pharmaceutical Sector." Advanced Materials Research 746 (August 2013): 551–56. http://dx.doi.org/10.4028/www.scientific.net/amr.746.551.

Full text

Abstract:

The main scope of this paper is to perform a real options analysis that is often recommended as an emerging valuation technique for high-risk investment projects. The pharmaceutical sector is a sector where the real option can be positively applied to incorporate the flexibility and the risks of the new product development. In this paper the real option theory is applied to a pharmaceutical company that is developing a particular new product. Due to the uncertain nature of the new product development, it can be strategic to evaluate the real option benefits for the investment under analysis.

APA, Harvard, Vancouver, ISO, and other styles

42

Bosch-Badia, Maria-Teresa, Joan Montllor-Serrats, Anna-Maria Panosa-Gubau, and Maria-Antonia Tarrazon-Rodon. "Corporate real estate, capital structure and value creation." Journal of European Real Estate Research 10, no. 3 (November 6, 2017): 384–404. http://dx.doi.org/10.1108/jerer-11-2016-0043.

Full text

Abstract:

Purpose This paper aims to analyse the corporate rent-vs-buy decision on real estate through the trade-off theory and default option in the framework of a corporation that aims to optimise its capital structure. Design/methodology/approach The methodological core of this paper comprises the trade-off theory that approaches the optimal capital structure by counterbalancing debt tax savings with bankruptcy costs. Impacts on the default option and the default barrier are made explicit. The paper also explores the practical applicability of the renting scenarios in the European context by examining the regimes of real estate investment trusts in different countries from the demand-side of commercial renting. Findings Analytical relationships with tax savings, bankruptcy costs, default option and default barrier are identified for the renting-vs-buying real estate decisions. Research limitations/implications The theoretical model assumes simplifications, such as constant debt, to make it operational. The paper centres exclusively on the trade-off capital structure theory. Practical implications This paper is an analysis of corporate real estate decisions together with capital structure. Applications are not only quantitative but also conceptual and strategic. Originality/value Identifying the main variables that govern the impact of corporate real estate decisions on capital structure and interweaving different approaches generates a conceptual framework that enlightens strategic thinking in this field.

APA, Harvard, Vancouver, ISO, and other styles

43

Zhang, Jie, Ji Gan Wang, and Yan Ping Chen. "The Real Option Model of Opportunity Cost in River Basin Ecological Compensation." Advanced Materials Research 518-523 (May 2012): 261–65. http://dx.doi.org/10.4028/www.scientific.net/amr.518-523.261.

Full text

Abstract:

One of the key issues of river basin ecological compensation is the compensation standard. The opportunity cost has the character of uncertainty. The character of opportunity cost in river basin ecological compensation standard was studied on base of economics theory. The current opportunity cost accounting method didn’t consider the uncertainty of opportunity cost. The real option model of opportunity cost in river basin ecological compensation was set up based on the binomial expression real-option model. The Xin 'an river basin was applied for the model and tested the feasibility of the real option model.

APA, Harvard, Vancouver, ISO, and other styles

44

Xue, Yong Gang, and Ming Li Zhang. "Application of Option-Based Pricing Model in Investment Decision." Advanced Materials Research 926-930 (May 2014): 3762–65. http://dx.doi.org/10.4028/www.scientific.net/amr.926-930.3762.

Full text

Abstract:

The methodology is proposed to price the land in China based on real options model. The results from the option-based model in this research favor the application of the real option theory in land prices and have important role on investment decision. The results show the following conclusions: Firstly, the empirical results show the uncertainty with respect to built asset return has a substantial effect on increasing land prices, which is only explained by the option theory. Secondly, the asset price and the size of city have positive role on increasing the land price from. Thirdly, the risk-free interest rate affects option prices in two opposite direction. Lastly, information of the previous period has a very strong effect on the next period's land price.

APA, Harvard, Vancouver, ISO, and other styles

45

Pushkar, Shashank, Prity Kumari, and Akhileshwar Mishra. "IT Project Selection using Fuzzy Real Option Optimization Model." International Journal of E-Entrepreneurship and Innovation 3, no. 3 (July 2012): 37–49. http://dx.doi.org/10.4018/jeei.2012070104.

Full text

Abstract:

Optimal selection of interdependent IT and e-business projects for funding in multi-period has been challenging in the framework of Real Option analysis. This paper presents a mathematical model to optimize the fuzzy Option value for multi-stage portfolio of such projects. A fuzzy Option model is used to maximize the Option value of each project. The IT and e-service portfolio selection problem is formulated as a fuzzy zero–one integer programming model that can handle both uncertain and flexible parameters to determine the optimal project portfolio. The idea of optimizing the fuzzy real option value of the portfolio is to maximize the overall value and to minimize the downside risk of the selected portfolio for funding. A transformation method based on qualitative possibility theory is developed to convert the fuzzy portfolio selection model into a crisp mathematical model from the risk-averse perspective. The transformed model can be solved by an optimization technique. The optimization model and solution approach can help e-entrepreneurs and IT managers in optimal funding decision making for projects prioritization to implement e-business and other IT services.

APA, Harvard, Vancouver, ISO, and other styles

46

Jun, Jae-Bum, and Sam-Su Lee. "Time to Invest in Real Asset with Option Pricing Theory - Focused on REITs -." Korean Journal of Construction Engineering and Management 11, no. 6 (November 30, 2010): 54–64. http://dx.doi.org/10.6106/kjcem.2010.11.6.54.

Full text

APA, Harvard, Vancouver, ISO, and other styles

47

Liu, Jicai, Ruolan Gao, and Charles Yuen Jen Cheah. "Pricing Mechanism of Early Termination of PPP Projects Based on Real Option Theory." Journal of Management in Engineering 33, no. 6 (November 2017): 04017035. http://dx.doi.org/10.1061/(asce)me.1943-5479.0000556.

Full text

APA, Harvard, Vancouver, ISO, and other styles

48

Ming, Zeng, Zhang Ping, Yu Shunkun, and Zhang Ge. "Decision-making model of generation technology under uncertainty based on real option theory." Energy Conversion and Management 110 (February 2016): 59–66. http://dx.doi.org/10.1016/j.enconman.2015.12.005.

Full text

APA, Harvard, Vancouver, ISO, and other styles

49

Fang, Shuo, Jun Liu, Min Liu, Zhi Zhang, and Yan Hong Zhou. "Photovoltaic Power Generation Investment Decision-Making Framework Based on Real Options Theory." Applied Mechanics and Materials 392 (September 2013): 480–83. http://dx.doi.org/10.4028/www.scientific.net/amm.392.480.

Full text

Abstract:

In the new electricity market environment, PV project investment faces more investment risks. For photovoltaic power generation characteristics of the project and with the integrated current research, we put forward the investment decision-making framework based on real option theory; we enrich and develop the applications of real options theory about investment decisions in the electricity, there are certain theoretical and practical significances.

APA, Harvard, Vancouver, ISO, and other styles

50

YAP, ROBERTO C. "Option valuation of Philippine forest plantation leases." Environment and Development Economics 9, no. 3 (May 19, 2004): 315–33. http://dx.doi.org/10.1017/s1355770x03001116.

Full text

Abstract:

The Philippine forest plantation lease is modelled as an option whose value arises from market uncertainty and the irreversibility inherent in sunk costs required to establish plantations. The value of this option could be a significant factor in the planting decisions of leaseholders. Real options theory could help explain why in spite of the prospects of adequate financial returns, Filipino leaseholders are slow to establish plantations. The opportunity cost of investing is demonstrated to be highly sensitive to uncertainty of the future value of the plantation. Real options analysis is also utilized to evaluate policies intended by the Philippine government to promote plantation development.

APA, Harvard, Vancouver, ISO, and other styles

We offer discounts on all premium plans for authors whose works are included in thematic literature selections. Contact us to get a unique promo code!