Relevance of Real Options to Corporate Investment Decisions
20 Pages Posted: 6 Apr 2008
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: 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
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