The Pricing Of Real Option And Its Applications

Today the progress made in information technology has greatly changed people’sideology, The business management environment is undergoing major and profoundchanges, which requires companies to pay close attention to the risks and uncertainties,facing a good grasp of the pulse of the market, the right to choose the direction ofinvestment, and accurately control the scale of investment, effectively avoid investmentrisks. Method in the evaluation of investment decisions in the past, we mainly useinvestment decisions NPV method, this method has some advantages, but it also hassome drawbacks, it is mainly applied to the investment project whose future incomedetermined and the less risky. Flexible guide for investors but it can not be a good dealwith investment issues, which requires new investment evaluation methods and concepts,and this is what this article tell us.Real option is the development and application of financial options which practicein the investment process, and also is the forefront of investment evaluation method. Asthe NPV method development and promotion,the real options provide a new method ofanalysis and research ideas for traditional investment appraisal methods, the value of thisnew theoretical approach is also being gradually investors accepted. This evaluationmethod in foreign countries has been studied for many years, but the domestic isbasically still in its infancy, this paper is on the basis of the study abroad experience,based on historical data of communications enterprise technology investment projectsand the establishment of the evaluation model, through the analysis of this model tomeasure the project is worth the investment.The paper first introduces the background and significance of their research, andthen a simple description of the status of real options, followed by a brief introduction tothe research objectives, research content and research framework, and finally discussesthis research methods and innovative point.The first and second chapters as the theoretical part of this article, the first focusingon traditional methods of evaluation, financial options, real options theory and pricingmethods are discussed, in order to lay the basis of paper application. Real options on the communication enterprise technology investment projects are then described andanalyzed, type and nature of the analysis contained in the communication technologyinvestment real options, and finally select one of the available assessment framework.Chapter3naturally become the third part of this article, the main theory empiricaltest of the model as well as the assessment framework for the application, use the modelwhich chapter3select, then apply in a technical communication enterprises investmentprojects,and at last compare the different evaluation methods and make analysis.The final chapter tell the conclusions drawn in this paper, and put forward a guidingrole in the use of real options which should be noted that the problem, as well assuggestions for future applications which can play.