Corporate Finance 1 (Fach) / 10 Real Options Analysis The Binomial Method (Lektion)
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- 1 When can we use options models in the "real" world? project outcomes closely imitate the price performance of a liquid "replicating portfolio" option pricing theory has to be justified.
- 2. Why do we use financial options models in the "real" world? better method for evaluating projects in the face of uncertainty
- 3. What are principal differences between the options approach and the NPV approach? Options are more valuable when projects are risky single, riskless discount rate throughout.