Valuation of the Liability Structure by Real Options (Modern Finances, Management Innovation and Economic Growth Set, 5)

Heller, David

ISBN 10: 1786307340 / ISBN 13: 9781786307347

Published by Wiley-ISTE, 2022

About this Item

Seller Inventory # 18395694119

Bibliographic Details

• Title: Valuation of the Liability Structure by Real Options (Modern Finances, Management Innovation and Economic Growth Set, 5)
• Publisher: Wiley-ISTE
• Publication Date: 2022
• Language: English
• ISBN 10: 1786307340
• ISBN 13: 9781786307347
• Binding: Hardcover
• Condition: New

About this title

Synopsis

The valuation of the liability structure can be determined by real options because the shares of a company can be regarded as similar to the purchase of a financial call option. Therefore, from this perspective, debt can be viewed as the sale of a financial put option. As a result, financial analysts are able to establish different valuations of a company, according to these two financing methods.

Valuation of the Liability Structure by Real Options explains how the real options method works in conjunction with traditional methods. This innovative approach is particularly suited to the valuation of companies in industries where an underlying asset has high volatility (such as the mining or oil industries) or where research and development costs are high (for example, the pharmaceutical industry). Integration of the economic value of net debt (rather than the accounting value) and integration of the asset volatility are the main advantages of this approach.

About the Author

David Heller is a teacher-researcher in finance and leads the masters in finance program at the ISC in Paris, France.