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Real Options in Capital Investment: Models, Strategies, and Applications

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The editor of this book, Lenos Trigeorgis, earned his Ph.D. from Harvard University, and has since that published several articles in distinguished journals on one of his favourite research subjects - real options. By using basic option pricing principles in capital investments, a practicing manager as well as an academic can develop financial models that handle stochastic information, for instance oil prices. The capital investment theories explained in this book is the greatest breakthrough in capital investments since the 60's. The widely accepted DCF-method should partly be replaced by Option Pricing Models, OPM, as this is the first method that can handle volatility and uncertainty in a theoretically consistent way. Several academics are finding this difficult to accept - the old "truth" doesn't hold is a volatile environment! If you believe in Discounted Cash Flow analysis - you MUST read this book! If you want to stay ahead of your competitors, you SHOULD read THIS comprehensive book on capital investments! It may require a lot more maths that any other books on the subject, as the book is rather theoretical with several real life examples. Most of the 20 authors have a background in maths as well as economics, something preferrable but not necessary for the reader of this excellent book. The book could be recommended for MBA and PhD students. Niklas Uddstrom (niklas.uddstrom@mandatum.fi)