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The Real Options Approach to Valuation: Challenges and Opportunities

Eduardo Schwartz

Latin American Journal of Economics-formerly Cuadernos de Economía, 2013, vol. 50, issue 2, 163-177

Abstract: This paper provides an overview of the real options approach to valuation mainly from the point of view of the author who has worked in this area for over 30 years. After a general introduction to the subject, numerical procedures to value real options are discussed. Recent developments in the valuation of complex American options has allowed progress in the solution of many interesting real option problems. Two applications of the real options approach are discussed in more detail: the valuation of natural resource investments and the valuation of research and development investments.

Keywords: Real; options (search for similar items in EconPapers)
JEL-codes: G12 (search for similar items in EconPapers)
Date: 2013
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Latin American Journal of Economics-formerly Cuadernos de Economía is currently edited by Raimundo Soto

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