Real Options and Project Evaluation

10.1596/27376 ◽  
2011 ◽  
Author(s):  
Odin K. Knudsen ◽  
Pasquale L. Scandizzo
Keyword(s):  
Real Options ◽  
Project Evaluation

Tracking Stocks and the Acquisition of Real Options

CFA Digest ◽  
2001 ◽  
Vol 31 (2) ◽  
pp. 101-102
Author(s):  
Frank T. Magiera
Keyword(s):  
Real Options ◽  
Tracking Stocks

Real Options and Investment Valuation

CFA Digest ◽  
2002 ◽  
Vol 32 (3) ◽  
pp. 40-43
Author(s):  
Frank T. Magiera
Keyword(s):  
Real Options ◽  
Investment Valuation

Real options in business practice

2013 ◽  
Vol 2013 (3 (156)) ◽  
Author(s):  
Paulina Adamczyk ◽  
Waldemar Rogowski
Keyword(s):  
Real Options ◽  
Business Practice

Project portfolio valuation using real options

2020 ◽  
Vol 13 (2) ◽  
pp. 126-146
Author(s):  
A.B. Lanchakov ◽  
S.A. Filin ◽  
A.Zh. Yakushev
Keyword(s):  
Real Options ◽  
Real Option ◽  
Project Portfolio ◽  
Risk And Uncertainty ◽  
Expected Effect ◽  
Investment Projects ◽  
Financial Options ◽  
Portfolio Efficiency ◽  
The Face ◽  
Effective Development

Subject. The article analyzes the expected effect of a portfolio of projects in the face of risk and uncertainty, when using real options. Objectives. The purpose is to offer a more objective formula to assess the expected impact of a portfolio of projects for real investment objects under risk and uncertainty, using real options, and provide recommendations for improving the portfolio efficiency. Methods. The study draws on methods of real options and evaluation of investment projects through the real option value, the cash flow discounting method, synthesis, and mathematical modeling. Results. We systematized the main types of real options and developed a formula for calculating the expected effect of project portfolio implementation. The said formula shows that considering the additional long-term costs embedded in a portfolio of real options, which are associated with the use of these real options, and, therefore, reducing the overall risk of projects and the entire portfolio, permit to improve the objectivity of such calculations. Conclusions. When analyzing real options that have real assets as underlying instruments, it is often impossible to apply the computational formulae for financial options, as they differ significantly. The systematization of the main types of real options helps expand the range of application of management solutions. The offered formula enables to improve the efficiency of project insurance under risk and uncertainty and to use additional opportunities for effective development of the company.

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