The Research To The Investment Decision-Making Basing On The Option Pricing Theory

Because of the acceleration of uncertainty in the market, the traditional investment decision-making method did not adapt to the demand of modern project management any longer. The traditional method never considers the uncertainty of future profit and cost encountered by the majority investment decision-making; The traditional method neglects the sunk cost of the majority investment, once the original cash was invested, it can never be taken back entirely because the investment is irreversible. All those called for the generation of new method of investment decision-making, The option method fits in with the need. The breakthrough of financial option theories made it possible to apply the theory to real assets, And the reasonable solution to uncertainty of option theory makes its application to real assets be the research trend of many researchers. Under this circumstance, this paper discusses the application of option theory to investment decision making.Firstly, this paper introduces the researching background and object, mainly introduces the development of investment decision-making method and its present research situation abroad and domestic . In Chapter 2, this paper starts from the basic concepts, introducing the fundamental theories of financial option, and Black-scholes pricing theory, afterwards, deriving the real option and its pricing theory, comparing with financial option. In Chapter 3, this paper discusses possibility of evaluation to option pricing theory in the investment decision-making, classifies the option in the investment decision-making, and compares the NVP and option pricing theory. The Chapter 4 is the main body of the paper. It strictly proves the most superior investment rule in the single time project and continuous investment decision-making, and confirm the marginal value to the most superior investment rule, and analyses the influence factor to the marginal value. We use 3 samples in this Chapter and demonstrate the option pricing theory in various investment decision-making. Finally, in Chapter 5, this paper makes sum-up, and indicates the future researching direction. This paper adopts the prescriptive approach to proceed with the research of option pricing theory and its application, It confirms the most superior investment rule in the investment decision-making and makes sensitivity analysis. We get the marginal value to the most superior investment rule in single and continuous investment condition, it strengthens the scientific nature of decision-making and has certain practical value to enterprise's investment decision-making formulation.