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VALUATION METHOD OF THE TWO SURVIVAL FUNCTIONS

M. Franco-Nicolás, R. Herrerías-Pleguezuelo, J. Callejón-Céspedes and Juana-Maria Vivo
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M. Franco-Nicolás: Dpto. Estadística e Investigación Operativa, Universidad de Murcia, Campus de Espinardo, Murcia, 30100, Spain
R. Herrerías-Pleguezuelo: Department of Quantitative Methods in Economics, University of Granada, Campus de Cartuja s/n., Granada, 18071, Spain
J. Callejón-Céspedes: Department of Quantitative Methods in Economics, University of Granada, Campus de Cartuja s/n., Granada, 18071, Spain

Chapter 3 in Distribution Models Theory, 2006, pp 55-66 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractIn this paper, we discuss a new application of the survival functions in asset pricing from quality indexes. Thus, we propose the valuation method based on the two survival functions (VMTS) to find, under uncertainty, the market value from a quality index. Within this framework, from a one-dimensional quality index, VMTS is equivalent to the valuation method of the two distribution functions (VMTD), which produces loss with respect to the assessments from each component of a multidimensional quality index; nevertheless, VMTS provides profit with respect to these assessments from each component. Finally, we motivate the use of VMTS, as tools for the valuation of an asset, through a practical application on land pricing.

Keywords: Inference; Uncertainty; Copulas; Stochastic Dominance; Bayesian Techniques; Hierarchical Bayesian Model; Poisson-Gamma-Gamma Model; Experience Rating; Specific Fecundity Rates; Fecundity Curves; Topp and Leone Distributions; Waring Distribution; Factorial; Cluster; Discrimination Analyses; Survival Functions (search for similar items in EconPapers)
JEL-codes: C5 C7 (search for similar items in EconPapers)
Date: 2006
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