IT Investment Management using the Real Options and Portfolio Management Approaches

In earlier studies dealing with IT Portfolio Management (ITPM), the risk and return have not been treated concisely and in combination with the concept of portfolio. Real Options Theory (ROT) has been suggested as a way to analyze IT investments, assuming a dynamic positioning in relation to both these variables. Thus, the aim of this study is to analyze how the dimensions of ITPM combined with ROT help companies to justify and manage their IT investments, including the risks and returns. We performed a quantitative analysis in a company that invests intensively in IT. ROT was found to assist IT managers in the analysis of investments in the ITPM dimensions and allow greater flexibility in decision making and enhance the capacity to take advantage of market opportunities

Impact Investing: a primer for family offices

The goal of this report is to help family offices ask the right questions as they contemplate their path into impact investing. It is important to recognize that impact investing may not suit all investors. There will be family offices which conclude impact investing is not appropriate at this stage for them. While we are passionate about the potential of impact investing, we acknowledge the best future for the sector is where each investor can make informed choices about their own best interest. Each investor and investment institution needs to evaluate if impact investing fits with its needs, interests and unique context. It is with that in mind that we offer this report as a resource and tool that family offices can use to begin the conversations internally, to craft and design their own engagement strategy on impact investing with family members, advisers and potential investees, as well as to ensure that not only is their wealth growing in value, but also that their wealth can reflect their values

Real Option Valuation of a Portfolio of Oil Projects

Various methodologies exist for valuing companies and their projects. We address the problem of valuing a portfolio of projects within companies that have infrequent, large and volatile cash flows. Examples of this type of company exist in oil exploration and development and we will use this example to illustrate our analysis throughout the thesis. The theoretical interest in this problem lies in modeling the sources of risk in the projects and their different interactions within each project. Initially we look at the advantages of real options analysis and compare this approach with more traditional valuation methods, highlighting strengths and weaknesses ofeach approach in the light ofthe thesis problem. We give the background to the stages in an oil exploration and development project and identify the main common sources of risk, for example commodity prices. We discuss the appropriate representation for oil prices; in short, do oil prices behave more like equities or more like interest rates? The appropriate representation is used to model oil price as a source ofrisk. A real option valuation model based on market uncertainty (in the form of oil price risk) and geological uncertainty (reserve volume uncertainty) is presented and tested for two different oil projects. Finally, a methodology to measure the inter-relationship between oil price and other sources of risk such as interest rates is proposed using copula methods.Imperial Users onl

Hedging the exchange rate risk in international portfolio diversification : currency forwards versus currency options

As past research suggest, currency exposure risk is a main source of overall risk of international diversified portfolios. Thus, controlling the currency risk is an important instrument for controlling and improving investment performance of international investments. This study examines the effectiveness of controlling the currency risk for international diversified mixed asset portfolios via different hedge tools. Several hedging strategies, using currency forwards and currency options, were evaluated and compared with each other. Therefore, the stock and bond markets of the, United Kingdom, Germany, Japan, Switzerland, and the U.S, in the time period of January 1985 till December 2002, are considered. This is done form the point of view of a German investor. Due to highly skewed return distributions of options, the application of the traditional mean-variance framework for portfolio optimization is doubtful when options are considered. To account for this problem, a mean-LPM model is employed. Currency trends are also taken into account to check for the general dependence of time trends of currency movements and the relative potential gains of risk controlling strategies

Performance Management in Portfolio School Districts

Explores the challenges of performance-based oversight of portfolio districts -- districts trying to provide diverse types of schools with common standards and accountability -- and the capacities needed. Includes profiles and best practices

A real options approach to project management.

When scheduling an uncertain project, project management may wait for additional (future) information to serve as the basis for rescheduling the project. This flexibility enhances the project's value by improving its upside potential while limiting downside losses relative to the initial expectations. Using traditional techniques such as net present value or decision tree analysis may lead to false results. Instead, a real options analysis should be used. We discuss the potentials of a real options approach to project scheduling with an example and highlight future research directions.Decision; Flexibility; Information; Management; Net present value; Options; Project management; Project scheduling; Real options; Scheduling; Uncertainty; Value;

Solutions for Impact Investors: From Strategy to Implementation

In writing this monograph, our main goal is to provide impact investors with tools to tighten the link between their investment decisions and impact creation. Our intent is threefold: to attract more capital to impact investing; to assist impact investors as they move from organizational change to executing and refining their impact investment decision-making process; and to narrow the gap within foundations between program professionals and investment professionals thereby contributing to a mutual understanding and implementation of a portfolio approach to impact investing.Additionally, we intend to help break down the barriers making it difficult to identify opportunities in impact investing. To this end, we provide examples throughout the monograph and at www.rockpa.org/impactinvesting of impact investment opportunities in most major asset classes.While we understand the important role that impact investors can play in providing financial capital, we also want to acknowledge the wide range of non-financial resources needed to address the world's problems. Our intent with this monograph is not to provide a comprehensive list of investments across asset classes nor any type of investment advice with regard to the selected profiles. We strongly encourage the reader to conduct their own assessment and evaluation for risk and suitability before considering any investment

Private Sector Investment and Sustainable Development: The Current and Potential Role of Institutional Investors, Companies, Banks and Foundations in Sustainable Development

This paper seeks to provide the Financing for Development process with a perspective on the role institutional investors, companies, and foundations can play in the design and implementation of a financing strategy for global sustainability. This will help bridge the terminology and investment approaches of institutional investors, companies, foundations, and governments. The paper highlights ongoing efforts among private investors to increase the impact of their investments. It concludes with a set of key actions facing investors, companies and foundations in their transition towards investment practices that contribute to sustainable development

Viabilist and Tychastic Approaches to Guaranteed ALM Problem.

This study reconsiders the problem of hedging a liability by a portfolio made of a riskless asset and an underlying (underlying).Asset and Liability Management; Viability theory;

A model for determining whether a firm should exercise multiple real options individually or simultaneously

We develop a model for determining whether a firm should exercise two real options individually or simultaneously. The simultaneous exercise of both options has positive synergy, such as economies of scale, scope, and networks, while separate exercise of each option benefits from project flexibility. This tradeoff determines the optimal exercise policy. We investigate the static and dynamic management of multiple real options. A firm under static management determines the type of exercise of real options ex ante; on the other hand, a firm under dynamic management makes the decision at the time of exercise. The analysis reveals the gap between the two styles of managing. Most importantly, we highlight the advantage of dynamic management over static management, particularly for weakly correlated markets. We also explain empirical implications regarding a firmfs entry into several countries and regions in Asia.multiple real options, optimal stopping, exercise region, entry into Asia