The Real Options Solution: Finding Total Value in a by F. Peter Boer

By F. Peter Boer

The e-book is attention-grabbing and reads good. however it does not carry as much as the expectancies for the following:

- it truly is too simple. lots of the readers cannot use genuine thoughts in any respect after reading
- it's not so useful. Lacks the instruments that the opposite publication through Boer included

Overall, is a fascinating learn to get accustomed to the type of state of affairs the place actual ideas are of use and bring up your tradition at the subject, however it isn't really a pragmatic "solution"

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Extra info for The Real Options Solution: Finding Total Value in a High-Risk World

Sample text

The third is far less familiar and at the heart of this book: the use of options theory to value positions subject to uncertainty. The application of options theory to general business decision making is growing rapidly, and the literature is quickly identified under the term real options. Fortunately, the principles required to evaluate business positions and plans are not very different from those used to value financial options and other derivatives, traded daily in enormous quantities around the world.

This is the rejectionist school of thought. ”19 The high volatility of New Economy securities naturally reinforces the concept that they are dangerous investments. The arguments of the skeptics are worth considering seriously, especially because of the 60 percent correction to the Nasdaq that followed its fast run-up in value; but there are equally serious reasons for thinking the skeptics may have missed the point. ”20 It is time to consider the possibility that the marketplace judgments may be reasonable for the time at which they are made and that the financial tools being used to render judgment are the problem.

In other words, Lev’s results are inadequate to explain either the situational differences between companies or the ways in which relationships between the investments (say, R&D programs and new production facilities) play off on one another. Investors are interested in the future, and they will look beyond past economic performance in selecting their investment strategies. They will seek to move beyond economic value and to anticipate market value. Although some of the difference between book value and economic value can be accounted for by Lev’s intangible/knowledge capital, market value often moves far beyond economic value and will always be affected by the reaction of investors to business prospects.

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