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Title: Real Options in Practice by Marion A. Brach ISBN: 0-471-26308-7 Publisher: John Wiley & Sons Pub. Date: 08 November, 2002 Format: Hardcover Volumes: 1 List Price(USD): $59.95 |
Average Customer Rating: 4 (2 reviews)
Rating: 3
Summary: A good text on real options for intermediate practitioners.
Comment: This book builds a solid foundation on corporate applications of real options. The author is an MD and has worked many years as a medical researcher. Thus, she has a first hand knowledge in health care and pharmaceutical research. She builds on this wealth of experience to develop many interesting examples of real options related to pharmaceutical drug development. However, she is perfectly comfortable developing excellent examples across industries such as oil explorations, new product developments, and other traditional real option corporate applications.
The strengths of the book include an excellent foundation in financial option theory, a good explanation of the Black Scholes option model and the binomial option pricing model. There is also an excellent section on the history of options which date back to the age of the Pharaohs and the Greeks.
The author does also a good job at outlining the weakness of the Discounted Cash Flow (DCF) analysis method of valuing projects. DCF does not handle well uncertainty of projects outcome, and flexibility in management decision and investing schedule. These weaknesses are just where real options excel. One counterintuitive variable is that uncertainty, that corporate managers traditionally dislike, lowers the value of a project in DCF, but actually increases it in a real options framework. This is not so strange when you consider that volatility is the main driver of options values within the Black Scholes model.
The overall weakness of this book is that many examples are not so well explained from a mathematical standpoint. You are often left wanting more explanations to truly become comfortable using these techniques.
The experienced real option practitioner will find this book very interesting. The novice who wants to build a practical foundation better turn to "Real Options" written by Martha Amram and Nalin Kulatilaka which does a better job at explaining the underlying basic calculations behind each examples.
Rating: 5
Summary: A great hands-on approach
Comment: Excellent for those corporate decision makers who want to skip the theory aspect of real options and get straight to the heart of the matter. Truly accessible yet thorough, and includes many case studies to help illustrate how real options works in the real world.
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Title: Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decisions (Book and CD ROM) by Johnathan Mun ISBN: 047125696X Publisher: John Wiley & Sons Pub. Date: 20 September, 2002 List Price(USD): $69.95 |
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Title: The Real Options Solution: Finding Total Value in a High-Risk World by F. Peter Boer ISBN: 0471209988 Publisher: John Wiley & Sons Pub. Date: 04 February, 2002 List Price(USD): $49.95 |
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Title: Dealmaking Using Real Options and Monte Carlo Analysis by Richard Razgaitis ISBN: 0471250481 Publisher: John Wiley & Sons Pub. Date: 08 August, 2003 List Price(USD): $49.95 |
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Title: Real Options: Managing Strategic Investment in an Uncertain World by Martha Amram, Nalin Kulatilaka ISBN: 0875848451 Publisher: Oxford University Press Pub. Date: December, 1998 List Price(USD): $45.00 |
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Title: Real Options: Managerial Flexibility and Strategy in Resource Allocation by Lenos Trigeorgis ISBN: 026220102X Publisher: MIT Press Pub. Date: 14 March, 1996 List Price(USD): $60.00 |
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