Relevance of Real Options to Corporate Investment Decisions

20 Pages Posted: 6 Apr 2008

See all articles by Giampiero Favato

Giampiero Favato

Institute of Leadership and Management in Health - Kingston University

Date Written: July 2008

Abstract

Real Options is the term used to refer to the application of option pricing theory to the valuation of investments in non-financial or "real" assets where much of the value is attributable to flexibility and learning over time.

A key problem with Real Options is that there are many different approaches and in what follows the different taxonomies that have been identified are reviewed, together with their implications for management use.

Keywords: real, options, taxonomy, managerial, relevance, investment, decisions

JEL Classification: G12, G31

Suggested Citation

Favato, Giampiero, Relevance of Real Options to Corporate Investment Decisions (July 2008). Available at SSRN: https://ssrn.com/abstract=1116743 or http://dx.doi.org/10.2139/ssrn.1116743

Giampiero Favato (Contact Author)

Institute of Leadership and Management in Health - Kingston University ( email )

Kingston Hill
Kingston upon Thames
Surrey KT2 7LB
United Kingdom

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