Models of capital investments with private information and incentives: a selective review
Article Abstract:
A review of research studies on capital budgeting was conducted to determine the roles of the various models of capital investments and the problems encountered by a manager in granting incentives. The studies discuss various models, including the One Period Model and the Multiperiod Model. Both models have different variables interplaying with one another which affect capital budgeting. The models' shortcomings such as deemphasizing on some important facets of capital budgeting conditions are discussed and further studies regarding problems on capital budgeting are suggested.
Publication Name: Journal of Business Finance and Accounting
Subject: Business
ISSN: 0306-686X
Year: 1997
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The nature of option interactions and the valuation of investments with multiple real options
Article Abstract:
An analysis describing the nature of option interactions and valuation of capital budget investments with multiple real options is presented. A generic example is presented to illustrate the importance of accurate accounting for interactions. Results show that an additional option's incremental value exhibits less value compared to its case in isolation. In addition, research validates findings that the value of flexibility exhibits common option properties.
Publication Name: Journal of Financial and Quantitative Analysis
Subject: Business
ISSN: 0022-1090
Year: 1993
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Optimal replication of options with transactions costs and trading restrictions
Article Abstract:
An analysis of option replication in the presence of transactions costs and trading restrictions in the market is presented. The analysis focuses on a strategy where initial costs of a contingent claim's replication is minimized. It is shown that periodical revisions of portfolios do not yield optimal results in markets with trading frictions. The best possible case in such a situation is a cash flow surplus inexcess of desired levels.
Publication Name: Journal of Financial and Quantitative Analysis
Subject: Business
ISSN: 0022-1090
Year: 1993
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