The Real Options Approach To China's Risk Investment In The Project Management

The application of option pricing theory(OPT) have extended into areas outside the financial markets,such as investment decision-making,competition and strategy. At present,the application to investment decision-making of OPT have been well developed.However,its application to project management of venture capital is still a new area of study.Projects funded by venture capital are often under great uncertainty,and the investment decision-making of these projects depends on the value of real option applications to the project management of venture capital.The process of designing and mananging investment using real option reasoning is:first,distinguish and evaluating the option in the investment ;secondly,redesigning the investment in order to utilize the options better;finally, managing the investment using the options created by the second step.This paper attempts to disclose the real options in the venture capital projects,put forward the general approaches of pricing them, and summarize the suitable approaches and strategy in the whole process of project management of venture capital.In this paper the concept and classification of real option,the general principal of real option pricing are discussed;the characteristics of venture capital investment and the process of project management of venture capital are analyzed;on the basis of the above.the real options in the invest projects of venture capital are strictly examined;the approaches of both pricing the real options in venture capital investment and designing and managing venture investment using real options are emphasized;at the end of this paper ,the outlook of this research is given.