Customer Reviews

Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions (Book and CD ROM)

5 star:		(12)
4 star:		(3)
3 star:		(0)
2 star:		(0)
1 star:		(0)

 

 

Mun's book is excellent, but you should not buy it unless you are willing to buy the...software used extensively in the book.

The CD-ROM enclosed with "Real Option Analysis" includes

- the Real Option Analysis Toolkit (demo), which expires one week after installation.

- the Crystal Ball Software, which expires one mounth after installation.

This means that you have to buy the expensive software one week after installing the demo to have any benefit from the book...The book is a trick to get your to buy the...software -and it is a shame that you get no information of this before you find out that the demo has expired!

This was my first book on Real Options. After this, I complemented my knowledge with more accurate researches on the theoritic foundations on the subject (eg. Trigeorgis and Copeland).
What I liked of this text is that it was a soft landing into the Real Option world, with a simple and easily understandable description. Its major pro is to present transparently the basics of a concept that is often approached at a too high and formal level.
What I did not like is the fact that few chapters at the end were not really useful but full of stuff and formulas with no explanations that cannot practically be used. I had the sensation they were out of place, since I could grasp their meaning only after passing to more comprehensive books.
One more criticism is that you don't understand the effect of the difference between private and public risk in real options evaluation as you do with other texts. However, I still consider this the book where I formed my basics before being able to master some other more detailed book (but also more difficult to master). The Crystall-Ball package was also a nice surprise. At the end, if you consider the price and the content it was surely good value for money even though it's not a masterpiece.

decent read... did a good job on explaining practical uses of real options. would have been better if not so much written promoting the use of crystal ball. overall, happy to see that minimizes coverage on replicating portfolios and focuses on risk neutral prob. i recommend this book, especially if mba student and brief coverage in intro class of real options leaves you interested / unfulfilled.

This is an excellent text on Real Options Analysis. There is a definitive very well maintained balance between theory and practice. Dr. Mun will take you through a random walk, which is so natural and so powerfully pragmatic you will appreciate by the time you'll reach the final pages of the book. The powerful intuition Dr. Mun develops behind stochastic calculus and Ito's lemma makes it accessible and useful to the businessman who has to learn how to mitigate downside risks while optimizing growth opportunities in an uncertain economy. The book in itself is a real option - The mathematics is nicely explained only when needed for clarity of the subject. The abundant amount of reference is there for you to find out if interested. It is up to you to decide when you wish to exercise your options. If you can identify your real options, Dr. Mun will show you how to value those complex opportunities.

An excellent text. Discusses such advanced analytical techniques as Monte Carlo analysis and discounted cash flow in highly readable terms while providing a gamut of valuable information about this growing field. Congratulations, Dr. Mun!

Dr. Mun's cogent handbook demystifies real options analysis and delivers a powerful, pragmatic guide for decision-makers and practitioners alike. Novices will appreciate the exceptional clarity of the examples and techniques, while experienced analysts will treasure the book's depth and extensive insight into real-world applications. Everyone will love the real options software on the accompanying CD-ROM. Finally, there is a book that equips professionals to easily recognize, value, and seize real options in the world around them.

Jim Schreckengast

Senior Vice-President, R&D Strategy -- Gemplus International SA

The book leads the field in real options analytics and is a must-read for anyone interested in performing such analyses. Dr. Mun has made a formidable subject crystal clear and exponentially easy for senior management to understand. Monte Carlo simulation and Real Options software alone is worth the book price many times over. Excellent job!

"Dr. Mun has converted his tacit financial knowledge into a digestible user-friendly book. He effectively leads the reader on a solid path starting from Discounted Cash Flow, progressing through Monte Carlo analysis and evolving to Real Options to get even closer to the target of achieving confident corporate decisions. His ability to clearly explain the relationships of popular competing analysis methods will make this a must have reference book for today's decision makers."

Kenneth English

Director of Research and Development Emerging Technology.

What is a "real option"? This kind of option is not a derivative instrument, but an actual option (in the sense of "choice") that a business may gain by undertaking certain endeavors. For example, by investing in a particular project, a company may have the real option of expanding, downsizing, or abandoning other projects in the future. Other examples of real options may be opportunities for R&D, M&A, and licensing. In corporate finance, real options analysis or applies put option and call option valuation techniques to capital budgeting decisions.

This book is written for both the beginners and as those skilled in real options applications. The book is organized in such a way that each chapter has a brief summary and a list of questions, so you can construct a small exam based on these questions.

The book provides a refreshingly new view of evaluating capital investment strategies by taking into consideration the strategic decision-making process. The book provides a qualitative and quantitative description of real options, the methods used in solving real options, why and when they are used, and the applicability of these methods in decision-making. In addition, multiple business cases and real-life scenarios are discussed. This includes presenting and framing the problems, as well as introducing a stepwise quantitative process developed by the author for solving these problems using the different methodologies inherent in real options. Included are technical presentations of models and approaches used as well as their theoretical and mathematical justifications.

The book consists of two parts. The first part looks at the qualitative nature of real options, providing actual business cases and applications of real options in the industry, as well as high-level explanations of how real options provide much-needed insights in decision-making. The second part of the book looks at the quantitative analysis, complete with worked-out examples and mathematical formulae.

Pros:
- Has a good introduction to real options, suitable for the beginners
- Lots of remarkable, real-world examples
- Gradually progresses from basic to advanced techniques
- Provides some basic financial statement analysis concepts used in applying real options
- Compares financial options with real options; provides major similarities and differences

Cons:
- The accompanying CD disk includes the demo version of "Real Option Analysis Toolkit" (demo) and "Crystal Ball Software" - both expire briefly after the installation.

As practitioners and academics continue to grapple with quantifiable uncertainties in real asset decision making, the debate about real option models will no doubt continue.

Johnathan Mun's second book and more specifically his case study approach allows practitioners from diverse industries to enter the debate with simple excel asset pricing skills. To my mind there is no better pragmatic work on the topic than the second edition of Real Options Analysis. With the book in one hand and the robust SLS software up on the screen - framing, pricing and understanding real options is pretty straightforward.

Two points to note: After 30 days, just as you begin to get hooked on the superb software it is likely to gently expire. That's when you are saved by the second point; the author is hugely supportive - His `one line insights' in response to specific queries made this a great purchase.

Edinburgh. Scotland.