- Fall 21 (A)
Advanced Valuation --- This is a course on real options: The use of option theory to determine the value of flexibility, patents, technological innovation, learning by doing, marketing surveys, the potential to franchise or expand operations and other issues relevant to corporate strategy. Specific applications treated in detail: valuation of movie rights and patents, manufacturing facilities, and R&D. The course also conducts a detailed valuation of operations like power plants and refineries whose inputs, outputs or both are traded in futures markets. The course moves beyond Black-Scholes and the binomial option pricing model to various extensions required to fit real options applications. These extensions are also used widely in the valuation of advanced financial options. The course involves considerable spreadsheet work and shows how relatively simple spreadsheets can be used to implement the binomial option pricing model.