Real options method in the assessment of mining industry investment

2014 ◽  
Vol 2 (6) ◽  
pp. 261-268
Author(s):  
Андрей Гусев ◽  
Andrey Gusev ◽  
Денис Нарулин ◽  
Denis Narulin

Investment in mining projects involves significant costs, long period of time, consistent type of investment decisions and complex mosaic of the many unforeseen factors affecting the cost of the project. Real options valuation (ROV) is one of the modern methods of assessment that helps in adaptation and revision of mining projects under uncertainty. Application of the method is technically demanding and requires a certain knowledge of the mining industry, and also has three main barriers: the problem of marketing, analysis and consequences. The mathematical basis of this method is a valuation model based on option pricing model, invented by Black — Scholes. List of alternatives and opportunities in project phases discussed in the article demonstrates perfect suitability of the mining industry for practicing different types of real options.

2012 ◽  
Vol 472-475 ◽  
pp. 583-586
Author(s):  
Hua Luo ◽  
Ming Zi Zhu

The goal of this paper is to study the R&D project under incomplete information. We extend the multi-step quadrinomial option pricing model through a practical case, which is the R&D project of the machinery to deal with mechanical bits and pieces. We pricing the real options valuation (ROV) of the project and show a decision tree, which can provide managers flexible decisions to analyze technology and market uncertainty.


2009 ◽  
Vol 15 (4) ◽  
pp. 646-669 ◽  
Author(s):  
İrem Uçal ◽  
Cengiz Kahraman

Traditional valuation methods are less viable under uncertainty. Hence, other methods such as real options valuation models, which can minimize uncertainty, have become more important. In this study, the hybrid approach suggested by Carlsson and Fuller is examined for the case of discrete compounding as this approach better models risky cash flows. A new real options valuation model that will evaluate the investment in a more realistic way is suggested by postponing the defuzzification of parameters in early stages. The suggested model has been applied to the data of an oil field investment and in conclusion the loss of information caused by early‐defuzzification has been determined. Santrauka Tradiciniai vertinimo metodai yra mažiau patikimi esant neapibrėžtumams. Vadinasi, kiti metodai, tokie kaip realių pasirinkčių vertinimo modeliai, kurie gali minimizuoti neapibrėžtumus, tampa svarbesni. Šiame straipsnyje nagrinėjamas hibridinis Carlsson ir Fuller metodas, kuris buvo panaudotas diskrečiajam rizikingų pinigų srautų modeliavimui. Pasiūlytas naujas realių pasirinkčių vertinimo modelis, kuris realistiškiau įvertins investicijas, rodiklius apibūdinančią neapibrėžtą informaciją apdorojant ankstyvojoje stadijoje. Pasiūlytas modelis buvo pritaikytas investicijoms į naftos verslą modeliuoti, nustatytas informacijos nuostolis, kuris atsiranda dėl ankstyvo neapibrėžtų duomenų apdorojimo.


2016 ◽  
Author(s):  
G. A. Lozano ◽  
A. F. H. Ros

AbstractAlternative reproductive tactics and strategies (ARTS) refer to polymorphic reproductive behaviours in which in addition to the usual two sexes, there are one or more alternative morphs, usually male, that have evolved the ability to circumvent direct intra-sexual competition. Each morph has unique morphological, ecological, developmental, behavioural, life-history, and physiological profiles that shift the balance between reproduction and self-maintenance, one aspect being immunity. Immunoecological work on species with ARTS, which is the topic of this review, is particularly interesting because the alternative morphs make it possible to separate the effects of sex, per se, from other factors that in other species are inextricably linked with sex. We first summarize the evolution, development and maintenance of ARTS. We then review the main immunoecological hypotheses relevant to species with ARTS, dividing them into physiological, life-history, and ecological hypotheses. In context of these hypotheses, we critically review in detail all immunoecological studies we could find on species with ARTS. Several interesting patterns emerge. Oddly, there is a paucity of studies on insects, despite the many benefits that arise from working with insects: larger sample sizes, simple immune systems, and countless forms of alternative reproductive strategies and tactics. Of all the hypotheses reviewed, the immunocompetence handicap hypothesis and its derivatives have generated the greatest amount of work, but not necessarily the greatest level of understanding. Generally, greater understanding would occur if hypotheses and predictions were always explicitly articulated and several hypotheses with mutually exclusive predictions are addressed simultaneously. Integration has been a one-way street, with ecologists delving deeper into physiology, seemingly at the cost of ignoring their organisms’ evolutionary history and ecology. One possible useful framework is to divide ecological and evolutionary factors affecting immunity into those that stimulate the immune system, and those that depress it. Finally, the contributions of genomics to ecology are being increasingly recognized, including in species with ARTS, but we must ensure that evolutionary and ecological hypotheses drive the effort. There is no grandeur in the strict reductionist view of life.


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