On the property of real options and the assets that give rise to them

Property in financial options (derivatives) is stated and transferred through contracts, while in real options property may arise from assets under the management of the firm, without a formal contract properly defining property. Furthermore, in some situations the asset can be public, and its property shared among different agents or firms. The present paper intends to work on the mechanisms of appropriation (and hence transferability) of real options exploring the assets that give rise to them, and proposing the concept of indirect property of complementary assets. The meaning of property is explored, and also the dynamic of change between public and private assets. Finally, we develop on the features that define real options stemming from the indirect property of complementary assets.Real options, property rights, intangible assets, indirect property.

Investment and abandonment decisions in the presence of imperfect aggregation of information

The traditional marshallian rule of investing when the value of the investment is greater than its installment cost is modified in the presence of irreversibility and uncertainty, giving rise to an option component. Additionally, the interaction of participants holding each one a right to invest can give rise under imperfect information to situations of deviations from the optimal timing of exercise of the investment and to "herd behavior" or informational cascades given that the agents take into account when deciding not only their private set of information but also the information released to the market by the decisions made by the other agents. In the present paper we develop a model that tries to capture these effects and dynamics by showing revision of conditional expectations of the agents, and with considerations regarding the degree of dispersion of information in the economy and the effect of the number of participants and their effect into their behavior.real options, capital markets, investment, aggregation, information

A Note on Valuation of Companies with Growth Opportunities

Each company faces day to day investment opportunities. Just by staying in business the company is taking a decision of reinvesting. The question arising for those managers who have the responsability of allocating capital is the criteria they should use to differentiate between investment alternatives. The most proven, traditional and popular method of valuation is Discounted Cash Flow (henceforth DCF), which provides comparable information. This method requires both the assesment of expected future cash flows and a risk adjusted rate (used in the discount coefficient). Besides the current business the company is in, it can also face horizontal or vertical growth opportunities should events unfold favourable. Given the existence of these options for contingent or future growth, what would therefore be the value of the project (or firm)?

On the Valuation of Companies with Growth Opportunities

Each company faces day to day investment opportunities. Just by staying in business the company is taking a decision of reinvesting capital. These opportunities have to be fairly valued to overcome misallocation of resources. A project with high growth opportunities requires high reinvestments to take full advantage of them until it reaches its mature stage. These investments can be seen as a succession of call options on future growth. When a company with such prospects is valued using the discounted cash flow technique and growth is taken implicitly in the growing cash flows and the residual value, the value thus obtained will be higher than the true one (under certain circumstances). Technology advances and the effects of globalization create enormous growth opportunities, and so misvaluation risks are higher.real options; valuation; contingent claims valuation

A real options approach to tender offers and acquisitions processes

Corporate control has added value for an investor since it gives degrees of freedom about the use of assets, sources of finance, salaries, etc. On the other hand, real options create value through the flexibility associated to the ability to react to some relevant uncertainty. The process of acquisition of corporate control can have two real options associated, a waiting option and a growth option. In the waiting option value is created through sequential investment instead of investing at once, while the growth option carries all the private benefits the investor can seize from control by making follow up investments, which can also justify premiums paid above the former market price. A relevant proposition of our paper is that the exercise price of the growth option (and hence the amount to be paid as the control premium) can be affected by the release of information. We develop a model for these two theoretical extremes, one where the exercise price fully reacts to events, and one where the exercise price does not react at all, and we obtain that the timing of the process of acquiring control would depend on the reaction of the price to be paid to obtain control, so would the size of the control premium over the former price.

A camera calibration method for a hammer throw analysis tool

The hammer throw in athletics has been the subject of published research since the 1980s. This has focused on case studies of individual athletes or small cohorts and has identified a number of key performance indicators such as the speed profile of the hammer during the wind-up phase. To use these key performance indicators with current athletes a bespoke analysis tool is required for frequent data collection. An unobtrusive two cameras system was proposed and a non-standard planar calibration method that allows the safety cage to remain in place was designed. The performance of the non-standard calibration method was compared to the standard calibration method using simulated data. The non-standard method was found to be suitable when intrinsic camera parameters were not recomputed. The method is a suitable alternative for volumes that cannot easily be accessed with a calibration object or volumes that are too large for practically sized calibration objects

Thinning of Organic Apple Production with Potassic Soap and Calcium Polysulfide at the North of Spain.

Asturias, in the North West coast of Spain, is a region with old tradition at cultivation of apple and its transformation to cider. The production of apple is mainly done under traditional uses and semi-extensive or semi-intensive system and with local cultivars. Thinning strategy is little practiced and the biennial bearing cycle is one of the main problems for the farmers. The production of apple under organic techniques in Asturias is still limited but increasing. Since 2005, experiments have been conducted on several cultivars (‘Raxao’, ‘Xuanina’ and ‘Gold-Rush’) to evaluate the effects of Potassic Soap (with or without olive oil) and Calcium Polysulfide as thinning products. We present here the first promising results of these experiments. With different concentrations of both products we have increased the apple production of two cultivars for the period 2006- 2007. There were positive effects on the vegetative growth of the trees and on the quality of apples. In the spring 2007 we initiated new experiments with other cultivars (‘Durona de Tresali’, ‘Solarina’, ‘Raxao’, ‘Regona’) in order to confirm our results. The new experiments also include the comparison of their effects with those of commonly used chemical products and with those of manual thinning techniques