Valuing flexibility as a complex option

Article Abstract:

This paper develops an approach for valuing flexible production systems using contingent claims pricing. Demand curves for our model's underlying assets (output products) may be downward sloping, in contrast with the standard option pricing assumption. Also, our marginal production (exercise) costs may be increasing. In addition, we allow for multiple products and a production capacity constraint. These elements of the model result in complex exercise decisions for the contingent claims which comprise the production system's value. We illustrate our approach by valuing a flexible system that produces two products which have profit margin functions with stochastic parameters. (Reprinted by permission of the publisher.)

Research, Flexible manufacturing systems

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How Do Exchanges Select Stocks for Option Listing?

Article Abstract:

Research does not support the theory that volatility decreases with option introduction when option listing endogeneity is corrected via control sample methodology, as opposed to findings obtained when control samples are not used.

Options (Finance), Comparative analysis, Options exchanges

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Does a parentusubsidiary structure enhance financing flexibility?

Article Abstract:

The impact of a publicly traded parent-subsidiary structure on financing flexibility is analyzed.

Iowa, Analysis, Subsidiary corporations, Subsidiaries, Finance

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