Book Description
This completely revised and updated edition of
Applied Risk Analysis includes new case studies in modeling risk and uncertainty as well as a new risk analysis CD-ROM prepared by Dr. Mun. On the CD-ROM you'll find his Risk Simulator and Real Options Super Lattice Solver software as well as many useful spreadsheet models.
"Johnathan Mun's book is a sparkling jewel in my finance library. Mun demonstrates a deep understanding of the underlying mathematical theory in his ability to reduce complex concepts to lucid explanations and applications. For this reason, he's my favorite writer in this field."
—Janet Tavakoli, President, Tavakoli Structured Finance, Inc. and author of Collateralized Debt Obligations and Structured Finance
"A must-read for product portfolio managers . . . it captures the risk exposure of strategic investments, and provides management with estimates of potential outcomes and options for risk mitigation."
—Rafael E. Gutierrez, Executive Director of Strategic Marketing and Planning, Seagate Technology, Inc.
"Once again, Dr. Mun has created a 'must-have, must-read' book for anyone interested in the practical application of risk analysis. Other books speak in academic generalities, or focus on one area of risk application. [This book] gets to the heart of the matter with applications for every area of risk analysis. You have a real option to buy almost any book?you should exercise your option and get this one!"
—Glenn Kautt, MBA, CFP, EA, President and Chairman, The Monitor Group, Inc.
Note: CD-ROM/DVD and other supplementary materials are not included as part of eBook file.
Customer Reviews:
A 600-Page Advertisement.......2007-04-26
I found the discussion on nonparametric simulation, though brief, to be very helpful. The book also inspired me to use Excel's Solver in ways I had not considered before.
Beyond that, I was disappointed. The book is poorly edited and lacks a coherent structure. Once in a while, entire strings of paragraphs are repeated in two different parts of the book. More serious, however, is the fact that the book is largely an advertisement for the author's proprietary software.
If you are looking for a few techniques that you can apply in an Excel environment, you will find a few nuggets here and there. However, you will mostly be skimming through the 600 pages of rambling discussion.
Applying Monte Carlo Simulation.......2007-03-30
In the first few chapters the author is certainly successful in making the argument why one should use simulation rather than point estimates. However, the case studies are somewhat vague because the author presents the problem and discusses results of the simulation (using the Risk Simulator S/W) but leaves you wondering how he setup up the model to run this simulation and come up with the results(not even available in the excel examples on the CD). Clear examples of this case include the example on pages 75, 76 & the "Financial Planning" example on page 219.
As an IT Project manager, I didn't find it very helpul in addressing my problems and I wouldn't recommend it for people who want to learn about simulation without going too technical
Book Description
Corporate finance and corporate strategy have long been seen as different sides of the same coin. Though both focus on the same broad problem, investment decision-making, the gap between the two sides--and between theory and practice--remains embarrassingly large. This book synthesizes cutting-edge developments in corporate finance and related fields--in particular, real options and game theory--to help bridge this gap. In clear, straightforward exposition and through numerous examples and applications from various industries, Han Smit and Lenos Trigeorgis set forth an extended valuation framework for competitive strategies.
The book follows a problem-solving approach that synthesizes ideas from game theory, real options, and strategy. Thinking in terms of options-games can help managers address questions such as: When is it best to invest early to preempt competitive entry, and when to wait? Should a firm compete in R&D or adopt an accommodating stance? How does one value growth options or infrastructure investments? The authors provide a wide range of valuation examples, such as acquisition strategies, R&D investment in high-tech sectors, joint research ventures, product introductions in consumer electronics, infrastructure, and oil exploration investment.
Representing a major step beyond standard real options or strategy analysis, and extending the power of real options and strategic thinking in a rigorous fashion, Strategic Investment will be an indispensable guide and resource for corporate managers, MBA students, and academics alike.
Customer Reviews:
Right book for executives.......2007-03-20
I develop practical Game Theory Simulation Models for strategy formulations, experiments, and selection. This book provided me with a practical guide how to use Game Theory and Real Options for strategic analysis.
The use of Real Option with Game Theory was new for me.
Well written this book it is a must for executives.
[...]
Book Description
In the 1970s and the 1980s, developments in the valuation of capital-investment opportunities based on options pricing revolutionized capital budgeting. Managerial flexibility to adapt and revise future decisions in order to capitalize on favorable future opportunities or to limit losses has proven vital to long-term corporate success in an uncertain and changing marketplace.
In this book Lenos Trigeorgis, who has helped shape the field of real options, brings together a wealth of previously scattered knowledge and research on the new flexibility in corporate resource allocation and in the evaluation of investment alternatives brought about by the shift from static cash-flow approaches to the more dynamic paradigm of real options -- an approach that incorporates decisions on whether to defer, expand, contract, abandon, switch use, or otherwise alter a capital investment.
Comprehensive in scope, Real Options reviews current techniques of capital budgeting and details an approach (based on the pricing of options) that provides a means of quantifying the elusive elements of managerial flexibility in the face of unexpected changes in the market. Also discussed are the strategic value of new technology, project interdependence, and competitive interaction.
The ability to value real options has so dramatically altered the way in which corporate resources are allocated that future textbooks on capital budgeting will bear little resemblance to those of even the recent past. Real Options is a pioneer in this area, coupling a coherent picture of how option theory is used with practical insights in into real-world applications.
Customer Reviews:
Good insight with strong mathematical background.......2004-07-21
This is one of the first few books i reviewed during my recent research on real options. I would rate it as a more advanced text for those who are already familiar with real options and its ensuing mathematical formulation. Honestly it took me a while to figure out some of the maths ! Definitely not for the faint hearted.
By far the best RO book around.......2004-04-15
Trigeorgis provides a rigorous treatment of the concepts that are required to facilitate understanding of RO. In fact, a section in Chapter 2 can serve as a reference for a half-semester course in corporate financial theory. Amram's book is a disappointment. Copeland's book is a good alternative for those that seek a readable introductory RO book. However, the edition that I got had numerous errors (check the book's website for corrections). Once you familiarize yourself with the concepts, upgrade yourself to the level of Trigeorgis.
Good classic on Real Option Theory.......2002-06-23
A classic text on Real Option Theory. In comparison with Mr Copelands Text on Real Options, Trigeorgis has more depths, but Mr Copelands book is easier to read, as Copeland targets practitioners. The chapter on Real Options for the analysis of competetive strategies is worth reading, and much better than Mr Copelands remarks on that topic, but possibly not fully up to date. The future of real options seems to lie in their combination with game theory, CFROI and dynamic oligopolistic markets. Mr Trigeorgis describes that field of research in its baby stage, as the book is 6 years old, but his theories are still much better, than many other books on that topic.
Sound Analysis on Pricing Your Options.......2002-03-20
Real Options is the study of how to value potential business based on the real options they create rather than on discounting a simple stream of (erroneously) forecasted cash flows. Any business venture can be seen as a tangible corollary to a financial option, most commonly the Call or Put Option. For example, when Toyota and Honda build electric-fuel hybrid cars, they are not counting on an immediate stream of cash flows from hybrid car sales. Instead they are establishing a "Real" American Call Option on the ability to go to full hybrid car production ahead of the competition when the market for such vehicles manifests itself. How much they spend on their hybrid car programs is determined by finding the value of this option.
Lenos Trigeorgis shows how this is done. Conceptually, one can follow it well enough, but Lenos is merciless with the math. Still, one can grasp the basic concept by studying this book. A good read on the subject.
A really path-breaking work!.......2002-01-24
It's a very good book, which has changed my way of thinking in
some sense. Real options method is an exciting and challenging
subject in corporate finance.For sure, it deserves more
attention. Thanks for Mr.Trigeorgis'good job.
Book Description
Harness the power of real options
Real options theory is based on the Nobel Prize--winning work on financial options, and has captured the interest of executives, managers, and investors who need to understand the future profitability of an asset. Originally developed to value technology initiatives and companies, the method is now being applied broadly across various businesses and industries. The Real Options Solution offers comprehensive coverage of the real options approach with a five-step framework and examples for applying the author's unique total value model based on real options analysis. This approach will help executives and investors minimize the risk of committing to new ventures and delivers a framework flexible enough to apply to business initiatives in all types of companies.
Customer Reviews:
Explicit Treatment of a New Analytical Framework.......2003-05-28
This book attempts to expose the reader in a nontechnical manner to the new technique of evaluating investments in the New Economy characterised by volatility and uncertainty.The author does so without resorting to mathematical methods.The book is basically expository and attempts to build upon the readers'familiarity with financial options.It concentrates in describing the real options which each business decision is confronted with and demonstrates the flexibility which managers face. He views these opportunities as options even the decision not to implement the plan. This is a creative approach to understanding what real options is all about.
Cogent & illuminating look at valuation, risk & innovation.......2003-02-01
This book was a real revelation to me. The real options approach to valuation is a very valuable new tool, and this book explains how it works in clear terms. Perhaps more important is the extensive, thoughtful and provocative discussion throughout the book of risk and innovation, how to think understand them, and how to frame and manage the full process of value creation in business. This book is cutting edge, but any decision maker or investor in innovative business enterprises should definitely read it.
The most practical book ever read on the subject!.......2003-01-26
I would like to congratulate Dr. Boer on his success with making "real options" real for the practitioners. I have read many, if not most, most of the books out there on this topic, and found none to be as accessible and fun to read as Dr. Boer's treatment of this subject.
I have also bought his other book, The Valuation of Technology - Business and Financial Issues in R&D. Again, full of practical insights that are not available elsewhere.
I fail to understand the scathing review of the reader from Norway. Was this person expecting to learn about financial options, instead of real options, from this book? In that case, it was the reader's mistake for picking the wrong book! For real options, this book has no peer. I would recommend it to anyone who wants to apply the real options theory to real-world problems.
Thanks Dr. Boer for a job well done and for making a real contribution to realistic valuation and pricing of business opportunities.
Complete rubbish.......2002-12-08
Before reading the book I had spent only 15 minutes reading an article in a business magazine about real options. In those 15 minutes I learnt more about real options than after reading 280 pages in Dr. Boer's book.
I am just amazed about the other ratings below - these people must just be from another planet?!!
Do yourself a favour and do not buy this book (if your intent is to learn anything useful about real options). This is actually the first book I have ever thrown into the garbage bin (honestly).
Extraordinary Addition to Finance and Value Quantitation.......2002-06-16
This is an excellent text for an introduction to real options. I especially like the author's overall valuation model for high-technology companies, the "Total Value Model", that combines static discounted cash flow models for products currently generating revenue, and real options for technologies and products in development. I have already recommended this book to several CEOs because its so easy to read and understand. The text does not contain a single formula and is almost totally conceptual, absolutely excellent!!! I am already adopting the author's valuation approach in my own valuation service. Thank you Dr. Boer.
Amazon.com
Huge payoffs in business usually entail embracing lots of risk. That's the message of Real Options, by Martha Amram and Nalin Kulatilaka. The authors argue that standard models of evaluating strategic investments fail to consider the element of risk fully. "Uncertainty creates opportunities. Managers should welcome, not fear uncertainty," write Amram, a California-based consultant, and Kulatilaka, a Boston University finance professor, in describing the "real options approach." The book provides plenty of theoretical case studies, formulas, and charts that demonstrate how to shape business strategies using a system based on option-pricing. The method can value everything from undeveloped land to untried products. "With it, market leaders will understand how value is created in an uncertain environment and will know how much risk they are bearing," the authors write.
Risk is also inherently dangerous--that's an unintended lesson of Real Options. The two Nobel Prize-winning economists whose work serves as the foundation for this book--Robert Merton and Myron Scholes--were the brains behind Long-Term Capital Asset Management, the notorious hedge fund that was rescued under a plan engineered by the Federal Reserve. With that caveat in mind, business planners and managers should pursue Real Options with their eyes wide open. --Dan Ring
Book Description
In capital investing, as in life, you always have options. In today's extremely turbulent world, managers recognize how risky the most valuable investment opportunities often are, and how useful a flexible strategy can be. That's why they want to know all their options. Yet many current financial assessment tools fail to identify what investors can do to capitalize on future uncertain events. Martha Amram and Nalin Kulatilaka suggest a smarter new way to think about strategic investments in terms of real options. By applying options thinking--the concept behind the recent Nobel Prize-winning work on financial options--to the evaluation of nonfinancial assets, this innovative approach brings a financial market discipline to the evaluation of a company's opportunities. Using real options theory, managers can more effectively target crucial opportunities to redeploy, delay, modify, or even abandon capital-intensive projects as events unfold. Corporate executives in finances, investments, and project management should share this book with decision makers in information technology, strategic planning, corporate restructuring, venture capital, and law. Through timely case studies, the authors show managers how to use real options to evaluate investments and create exit strategies in RandD, product design, contracts, and information technology. By linking strategic vision and tactical project decisions, Real Options helps to improve capital investment planning and results.
Customer Reviews:
A rather disappointing book for the general reader.......2005-05-02
I was rather disappointed by this book. I was hoping for something which could help explain to business managers why processes such as IT delivery are uncertain, and the value of delivering flexible solutions. The initial part of the book makes a lot of strong qualitative statements of exactly the right sort:
- There is great value in breaking up large projects in uncertain markets
- Options (flexibility) create value out of uncertain events.
- Exit options which allow you to step away from a planned path, even if relatively expensive, may have significant value.
- An option such as an exit option, can make an investment viable when it would fail a traditional NPV test.
- Small speculative investments can enable larger investments to benefit from learning and to be much more accurately targeted.
- It may create greater value to start many projects and abandon more, rather than aiming to abandon a minimum number.
Unfortunately the remainder of the book then supports these statements only for a very limited set of circumstances. The Real Options approach only seems to work if the option can be translated into (or at least mapped onto) a tradeable financial security. There's no real attempt to provide tools to evaluate internal uncertainty, such as the delivery uncertainty common in IT projects, or the value of flexibility except where it maps to significant investment decisions.
The book does do a good job of explaining that real world situations are non-linear, with value which changes as a result of natural volatility, over time, and as a result of one or more decisions. Traditional NPV-based approaches greatly undervalue flexibility, insurance, learning and platform investments, and can't really deal with this non-linear aspect. Simply increasing the investment discount rate, which is the usual way of dealing with such problems, doesn't bring the correct focus onto uncertainty and total risk.
However, the mathematical basis for Real Option valuation is not well explained, and I found the processes difficult to follow. I suspect that the authors implicitly assumed a certain familiarity with economic and financial market techniques and terminology, which limits the value of this book to those seeking, as I was, to apply the techniques to other fields. It also left me puzzled as to why simpler approaches, such as Decision Tree techniques, can't be used instead.
Surprisingly for a relatively short book the text is very repetitive, and too often turns into a blatant advert for the Real Options approach compared with others, rather than making the case on its own merits.
Hindsight is a great thing, but it is unfortunate that this book praises Enron as an example of success through options manipulation, where we now know this was largely a "long company" scam. Some of the other examples, quoted at the height of the Internet boom, have also not stood the test of time. However, these should not be seen as invalidating the approach, merely as evidence of how uncertain things may really be.
This book provides some good ideas, and if your focus is major business-critical financial transactions it may be very useful. But I'm still looking for a good book on how to generically value flexibility.
At least this book is readable.......2004-04-15
The only saving grace about this book is that it is readable. However, the reason for this is because there is not much to learn about RO from this book. The author's talk about numerous examples and the "concept" of how RO was applied. But, you will not learn the actual process of using RO, unlike Copeland's or Trigeorgis' book.
Good introductory real options book for beginner or manager.......2004-04-05
It is a good introductory book on real options targeted at the audience of managers rather than experienced financial practitioners. Its contents covered financial options, binomial pricing and Black-Scholes model where the last ten chapters or so are case studies dedicated to applications of real options where it gives readers an idea how real options can be applied in diverse industries.
It makes a good and easy read for anyone who wants a quick flavor of real options without going through too much of the horrible maths that derivatives and real options seems to have !
I personally enjoy reading it from cover to cover.
Best user friendly treaty on Real Options........2003-06-01
This is an excellent book on the subject. It is the most readable and user friendly book on the market on Real Options. You don't need to understand Greek to tackle this book unlike the other ones. The author clearly explains the Black Scholes option model, the foundation of option valuation. They then illustrate how this model can be applied to non option business investment opportunities. The authors establish a real option framework to handle your business decision. It explores many practical cases in detail, so you get a good feeling for this approach. The authors also flesh out when it is better to use Black Scholes vs. Monte Carlo simulation in order to make a business decision.
Shamelss self-promotion.......2001-05-30
This book is another good example of a phenomenon I call "Fad-peddling" at its worst. "Real Option Valuation" is just a fancy new name consultants-for-hire have made up to describe a set of problems economists like Dr. Pindyck have called "contingency claims" problems for years. Given the history of the two terms, I prefer "contingency claims", because of its record as a term used by economists in academic journals and because "real options" sounds too much to be like some new fad, like "reengineering" or "liberation management."
Most of the other reviews are absolutely right: this book seriously lacks any quantitative explanation. No need to look for kind words; this is a serious oversight. And yes, this book does read like a long sales resentation.
While the authors adequatley describe broadly how economists and financial executives solve contingency claims problems (generally using binomial methods, simulation, or partial differential equations), they don't teach any of these methods in any useful way. At best, after reading this book, you will be able to recognize whether or not your organization has any "real options".
Beyond the quantitative short-comings of this book, however, there are some flawed fundamentals about their whole approach: this book treats real options as a new finance panacea for the 1990's, and suggests that the world of finance in 20 years will be a very different place because of these revolutionary ideas. Contingency claims problems are limited to a very specific set of economic phenomena with specific criteria. If the criteria are not present, contingency claims models fall apart. Consider the amount of abuse something as well-known as the black-scholes option pricing equation is subject to when it is applied to "real options valuation": the black-scholes equation is a function of two variables, primarily: time and stock price variance. When you take this equation and try to apply it to, say, the valuation of an option to market patented drug, how do you define variance and time? Time in an option contract is fixed in the contract. Variance is empirically observable from stock prices. Plus, how do we know that the value of drug patents resembles stock prices (log-normal process)? What if it is more like the behavior of a commodity (mean-reverting process)? And where are we going to get the data from anyway? In that case, the black-scholes equation needs to be abandoned and an alternative partial differential equation needs to be developed. But who is going to do that? At what cost? Obviously, at a certain point the benefits derived from exactly modelling your options is eclipsed by the cost and effort involved in doing so. The scariest part, however, happens when you realize that the greater the variance (risk) and the longer the timeframe chosen, the greater the final value of a project or investment. Now the project manager who wants to sell ice to the eskimos has the quntitative methods available to justify such a high risk project. (Just think, the project manager could sell this project to top management as a long-term investment anticipating the melting of the polar ice caps, when the price of ice in Greenland is expected to go through the roof).
This book tries to reach too far, suggesting that phenomena which never should be valued as contingency claims can be valued as such. Real options (or contingency claims) are best treated as a very specialized set of quantitative techniques used to model very specific phenomena which a company may or may not be subject to see "Investment under Uncertainty" by Dixit and Pindyck for an inventory of those phenomena). Push the envelope too far and the paper tears as it does here.
Book Description
This book is the first complete guide to valuation in life sciences for industry professionals, investors, and academics. Boris Bogdan and Ralph Villiger introduce the characteristics of drug and medical device development, explain how to translate these into the valuation, and provide valuable industry data. After guiding the reader through the theory of valuation, including discounted cash-flow and real options, the authors demonstrate how to value projects, patents, licences, firms and stocks on real-life examples, even treating complex licence and company structures. Special emphasis is put on the practicability of the proposed methods by including many hands-on examples, without compromising on realistic results. Ralph Villiger and Boris Bogdan have written what is sure to become the industry standard reference for valuation of pharmaceutical and biotechnology projects and companies. At a time when the healthcare industry is placing increasing emphasis on licensing and M&A as a core strategy this book provides a firm understanding of the way in which products and businesses can be valued at all stages of their development.
Dr. Martin Buckland, Chief Business Officer, Astex Therapeutics, Cambridge, UK
The book presents a number of innovative ideas, illustrated with practical examples that should improve decision-making in the drug development process, intellectual property evaluation, licensing and sublicensing. The authors make a persuasive case for the use of advanced techniques and the section on worked-examples should be particularly appealing to practitioners.
Dr. Martin Grossmann, Novartis Pharmaceuticals
There is no doubt that this book will become an essential reference tool for professionals in technology transfer, business developers and biotech companies, as well as the pharmaceutical industry and Life Science investors.
Jean-Pierre Saintouil, Director of Technology Transfer Department, Institut Pasteur, Paris, France
Book Description
Project Flexibility, Agency, and Competition exemplifies how the development and application of the real options paradigm has revolutionized project evaluation and corporate strategy. The first part of the book focuses on the valuation and the exercise of corporate real options, examining situations in which future project cash flows are (at least partially) controllable by management. Part II deals with agency issues, contracts, and incentives, concentrating on agency problems that arise in a dynamic setting when cash flows are controllable and decision makers have private information. Part III deals with the determination of optimal policies and the valuation of flexibility in natural resource investments. The final part of the book looks at strategic options and product market competition, particularly at reactions of outside parties where strategic interactions between agents are important. These reactions naturally lead to game-theoretic or industry equilibrium valuation models. Project Flexibility, Agency, and Competition is well-suited for corporate executives and students of finance, economics, and engineering management that focus on issues in budgeting or financial theory, and for courses in finance, strategy, and management that deal with options and strategy.
Customer Reviews:
Good book, learnt a lot........2001-07-09
Actually, I'd give it 3.5 stars. Excellent exposition and developement of material. However, there are quite a few typo's that would throw the reader with less math off the trail (and possibly some with good math). Good coverage of different types of cases, underlying math, real world appications and properties of solutions. Personally, I would have preferred all the rigorous material (including math proofs) in the one book rather than making statements and referring to seminal real options papers very often. Some credit is due here, however, as there are some proofs in appendices at the end of each chapter - I think these could have gone into a little more detail and depth - (I say this only because there isn't the vast library of books on this subject that exists for more mature disciplines - guess I was looking for a more comprehensive reference.) I have read Trigeorgis' other books so this was not an introduction. Liked the book, learnt a lot and am applying it to real life projects, however had to learn a fair bit on my own too.
Cutting edge but very challenging mathematically.......2000-07-02
This book gives you the latest update on what's going on in real options theory. Brilliant throughout, but its really too hard mathematically to be of much value for someone who's not a math-person. I found the chapter on the Antamina mine to be immensely interesting. It was originally used as a case study on options theory at Harvard and shows you how these academics went about valuing a peruvian mine. It's a very valuable chapter because it is focused on the practical side of real options theory. The chapter on "Rules of thumb for capital budgeting" didn't make much sense at all to me. The rest of the chapters are no easy read, but if you feel up to it mathematically, you're going to find this a very interesting book. If your not that much into mathematics, I think it's going to leave you rather frustrated. This book cannot have been meant as a guide for practitioners, it's more of a field day for academics, that's my impression at least.
The book of the year 2000 on real options !.......2000-04-22
OK, I admit the year has not ended yet, but that doesn't mean you mus not read this: now! This book is co-edited by Trigeorgis, one of the most proeminent author in the area. It deals with all the new developements on real options. It's objective is to give the researcher or student a key to enter the world of real options. Contributions are worldwide, mainly by people with a strong mathematical background. This makes it sometime difficult to understand for more management focused readers. However the book by the quality of the writting and the new ideas it brings, keeps you awake like a thriller. To be own by any person who want's to know about the future (nearly present) of corporate finance.
Book Description
Financial Analyst’s Indispensable Pocketguide is the first reference to give the more than 20,000 candidates who take AIMR-administered CFA exams annually—and the 60,000-plus CFAs and finance professionals who currently practice investment management—a single broad-based resource for specific terminology and information. Much more than just a dictionary, this dynamic book explains and expands upon the fundamental concepts that comprise a financial analyst’s lexicon.Within each section, Ramesh arranges fundamental terms alphabetically, then provides CFA-related tips and profiles of industry leaders. Key topics include:
*Timeless tips for CFA candidates and practitioners
*Graphics and mnemonics to help with important concepts
*Derivatives, equity valuation, and portfolio management
Customer Reviews:
I recommend !.......2007-05-14
It is a very practical guide for handy information. It is quite usefull for my daily work needs.
Useful overview, but not perfect.......2001-06-14
I'm not a CFA candidate, but I've been an investor for years and always appreciate learning more about the field. My father was president of the CFA for a couple of years, and after 15 years working on Wall Street I have a reasonably broad understanding of some finance.
What impressed me most about the book was how short and terse the definitions were. Clearly they are useful and present good insight into what's important and why.
What impressed me least was the lack of mathematical rigour (perhaps one can't have both brievity and exactness?). For example, many of the formulas only work for specific instances, and details about yield/rate conventions are omitted.
Overall, it struck me as useful overview and quick reminder to financial analysis and the language/terms used. It's not really indispensable, and is not authoritative. But for a quick refresher, or ballpark estimates it's fine.
A great book for those studying or who've completed the CFA.......2001-05-13
This is the only book of its kind, so far. The author compiled this pocket guide after completing his CFA program and realising that the vast concepts, terms and designations learnt were soon being forgotten.
That being the case, candidates of, as well as those who have completed, the CFA program would find this book a useful one-stop guide to all those concepts, terms and designations learnt in the pursuit of the CFA designation.
The book is arranged broadly around the various topics of the CFA program i.e. Quantitative Methods, Economics, Financial Statements Analysis, Equities, Fixed Income, Derivatives, Real Estate, Portfolio Management, Ethics, Behavioural Finance. As such, the CFA candidate would find this book more useful than say, a general finance/business masters student.
But I reckon that this book, though published as recent as this year, is already in need of an update. The CFA syllabus is constantly evolving. As a result, a number of concepts in say, Level 1 of the CFA Program, are not found in this book. Also, a number of the textbooks used in the CFA program which the author had based his book on, have either been superseded by newer editions or replaced all together.
All in all, I found this to be a useful book and a unique concept. Until a better book comes along, I will be using this book religiously to prepare for the CFA exams as well as to refresh my memory.
Good starting point.......2001-04-02
As a CFA candidate, I find this to be a useful summary of the key concepts that we are taught during the course of the programme. However, regard it as more of a "Cliff's Notes" of the programme -- with all its inevitable shortcomings -- but a handy little reference piece nonetheless. After completion of the programme and years down the road, I am sure that I will find it quite useful in helping to jog my memory and the sleepless nights that the CFA programme gave me! -- I hope, however, that a revised version will be introduced and perhaps with a less odd title. It is not a book for everyone, but anyone who wishes that s/he had made notes whilst studying for the CFA programme will find this book useful.
Book Description
A multi-author title that focuses on both the fundamentals of real options, and the very latest practical approaches for their application in the energy industry.
Designed to specifically aid valuation and investment decision-making within the energy industry.
Brings together the leading practitioners, consultants and academics from the energy sector who present the most up-to-date real option approaches and techniques, such as the diagrammatical approach, to help the industry move away from the current climate of uncertainty in the market.
Provides brand new case studies and examples of the use of real options in the industry to demonstrate how the latest techniques can be applied to power generation, fuel supply and demand issues, and strategic as well as environmental issues in the energy sector.
Additionally, includes the fundamentals of real option pricing and modelling, such as option valuation, modelling approaches, and optimisation.
Emphasises applications of theory to practical situations with worked examples that enable the reader to adopt them in their own projects.
Average customer rating:
- Save your money....
- An insightful overview and a practical reference
- The truth about real options.......
- A clear approach to linking strategy, value and risk
- Balanced discussion on hot topic
|
Strategy, Value And Risk-The Real Options Approach
Jamie Rogers
Manufacturer: Palgrave Macmillan
ProductGroup: Book
Binding: Hardcover
 General
| Business & Investing
| Subjects
| Books
Options
| Investing
| Business & Investing
| Subjects
| Books
Management
| Management & Leadership
| Business & Investing
| Subjects
| Books
ASIN: 0333973461 |
Book Description
In the 1990s shareholder value was applied to all aspects of corporate strategy and management decisions as a result of intense competition, globalization, advances in technology, deregulation and the financial markets. As we enter the 21st Century the business environment is one of increasing creative destruction, where competitive advantage is much harder to sustain. Real Options, a type of advanced financial analysis, applies financial option theory to real assets and offers a strategic framework that recognizes the need for management flexibility and to leverage risk in this corporate environment.
Customer Reviews:
Save your money...........2003-05-27
This book is heavily overpriced and not worth buying. For a non-technical introduction try Amram/Kulatilaka, for the technical introduction read in particular the books by Mun. In my perspective - as a frequent author on real options - this contribution is a complete waste of money (and lots of it I may add).
An insightful overview and a practical reference.......2003-04-25
Rogers has written an outstanding book on strategic option analysis and decision making. Strategy, Value and Risk - The Real Options Approach provides an insightful overview of historical approaches to valuing strategic options such as, DCF/NPV and SVA, and compares them to the Real Options Valuation (ROV) approach. The book is well organized, concise and easy to read and serves as a practical guide for understanding when and how to apply these approaches.
I regard Rogers' book as an informative reference for anyone involved in evaluating strategic initiatives and find that it is a great complement to the corporate strategy standard, Valuation by Copeland, Koller & Murrin, which briefly discusses the use of option pricing and decision tree analysis to value corporate flexibility.
I appreciate the brevity of Rogers' book along with its focus on key concepts and practical examples, but admit that I would be interested in reading more of what the author has to say about historical and emerging approaches to corporate strategy and decision making. I also agree with another reviewer that providing access to the spreadsheets used in the case studies would be very helpful and further increase the book's appeal as a practical reference applicable to a wide audience.
The truth about real options..............2002-11-26
Let's face it, since the tech wreck and the collapse of Enron, the real options valuation (ROV) cult has taken a pasting. A number of commentators have expressed the view that ROV were just another way of investment bankers convincing investors to pay too much for assets.
To get a balanced insight into real options you should read this book. The truth is that the real option concept does provide a break through in thinking about risk, strategy and value....however, we need to recognise that it is also prone to abuse. As a colleague of mine one said "ROV is conceptually easy to understand - so when you are valuing a project it is easy for a creative mind to find valuable real options under every rock!".
The trick in applying ROV is correctly framing and valuing a real option - and importantly caputuring those "sold" real options (i.e. real options which detract from value). Most books on ROV tend to squib on this crucial stage of framing and valuing of real options.
This book, in a very concise, manner takes you from the underlying economics of ROV, through to the framing and valuation of real options. The best insights in the book come from the three detailed case studies which handily compare DCF and ROV valuations using three case studies (if you want the classic energy trading ROV case study, see case study 2).
If you buy the book, be warned - it is pretty thin. However, this is more than compensated for by the very clear argument from base economics through to valuation which will ensure that your conceptual understanding of ROV is better than other books which get bogged down in the types of real option (e.g. option to delay, abandon...etc) and are three times the length.
My one suggestion to the publisher is that a useful addition would be to provide access to the underlying spreadsheets used in the valuation - it would probably take most readers several days to reconstruct each case study.
A clear approach to linking strategy, value and risk.......2002-11-20
This book provides a clear approach to grounding business strategy in the context of value and risk, going beyond conventional approaches focused on key performance indicators and the like. The text is balanced between practical case studies and discussion of the ideas and techniques underlying the "real options" approach.
The first half of the book brings together developments in strategy, real options, risk management and game theory to aid managers struggling to deal with standard financial analyses of their projects that may not be capturing the major sources of value they believe exist. The second half of the book describes the tools and mathematical framework, in a broad range of areas, necessary to practically implement the real options framework.
The text is easy to read and concise, and makes real options accessible to a wide audience in relatively few pages. While it would benefit from more detail in some places, this book should provide both a good introduction and starter manual for those curious about the link between value and strategy.
Balanced discussion on hot topic.......2002-10-25
Real options is a hot topic in financial management. Rogers has written a good book that strikes the right balance between big picture (this is the strategy portion of the book) appropriate for senior management, and details on the analytics appropriate for financial analysts and modelers. This balance is key because a common challenge for real options is making it less of a black box to senior decision makers. As the title indicates, Rogers places real options in a broad context of strategy, valuation and risk management -- some texts on real options come across purely as financial tools and miss this broader context. There are several realistic case studies included (IT project, electricity generation and pharmaceutical R&D). Senior management should read the first half, and financial techies can dig into the details in the second half. I would like to have seen a longer discussion on decision analysis; however, it covers a lot of territory in a compact size.
Books:
- Money, Banking, and Financial Markets
- Move Your Stuff, Change Your Life : How to Use Feng Shui to Get Love, Money, Respect and Happiness
- Natural Swimming Pools: Inspiration For Harmony With Nature (Schiffer Design Book)
- Option Volatility & Pricing: Advanced Trading Strategies and Techniques
- Options, Futures and Other Derivatives (6th Edition)
- Origins of the Crash: The Great Bubble and Its Undoing
- Payback: Reaping the Rewards of Innovation
- Payback: Reaping the Rewards of Innovation
- Prefab
- Principles of Financial Engineering (Academic Press Advanced Finance)
Books Index
Books Home
Recommended Books
- Encyclopedia Judaica 22 Volume Set
- Against the Wall
- The Clock of Ages: Why We Age, How We Age, Winding Back the Clock
- The Theming of America
- Vertebrates: Comparative Anatomy, Function, Evolution
- Behavior in Organizations: Understanding and Managing the Human Side of Work
- A Knife to Remember
- Modern Housing Prototypes
- Tokyo: A Certain Style
- Whiter Than the Lily
Real Options Analysis: Tools and Techniques for Valuing Strategic Investment and Decisions, 2nd Edition (Wiley Finance)
Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel
Financial Modeling with Crystal Ball and Excel (Wiley Finance)
Simulation Techniques in Financial Risk Management (Statistics in Practice)
Real Options, Revised Edition: A Practitioner's Guide
