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An Exact Soultion For The Investment And Market Value Of A Firm Facing Uncertainty Adjustment Costs And Irreversibility
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Book Synopsis An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility by : Andrew B. Abel
Download or read book An exact solution for the investment and market value of a firm facing uncertainty, adjustment costs, and irreversibility written by Andrew B. Abel and published by . This book was released on 1994 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis An Exact Soultion for the Investment and Market Value of a Firm Facing Uncertainty, Adjustment Costs, and Irreversibility by : Andrew B. Abel
Download or read book An Exact Soultion for the Investment and Market Value of a Firm Facing Uncertainty, Adjustment Costs, and Irreversibility written by Andrew B. Abel and published by . This book was released on 2010 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper derives closed-form solutions for the investment and market value, under uncertainty, of competitive firms with constant returns to scale production and convex costs of adjustment. Solutions are derived for the case of irreversible investment as well as for reversible investment. Optimal investment is a non-decreasing function of q, the shadow value of capital. The conditions of optimality imply that q cannot contain a bubble; thus, optimal investment depends only on fundamentals. However, the value of the firm may contain a bubble that does not affect investment behavior. Relative to the case of reversible investment, the introduction of irreversibility does not affect q, but it reduces the fundamental market value of the firm.
Book Synopsis An Exact Solution for the Investment and Market Value of a Firma Facing Uncertainty, Adjustment Costs, and Irreversibility by : Andrew B. Abel
Download or read book An Exact Solution for the Investment and Market Value of a Firma Facing Uncertainty, Adjustment Costs, and Irreversibility written by Andrew B. Abel and published by . This book was released on 1993 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Economics of Inaction by : Nancy L. Stokey
Download or read book The Economics of Inaction written by Nancy L. Stokey and published by Princeton University Press. This book was released on 2009 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: In The Economics of Inaction, leading economist Nancy Stokey shows how the tools of stochastic control can be applied to dynamic problems of decision making under uncertainty when fixed costs are present. Stokey provides a self-contained, rigorous, and clear treatment of two types of models, impulse and instantaneous control. She presents the relevant results about Brownian motion and other diffusion processes, develops methods for analyzing each type of problem, and discusses applications to price setting, investment, and durable goods purchases."--Pub. desc.
Book Synopsis The Effects of Irreversibility and Uncertainty on Capital Accumulation by : Andrew B. Abel
Download or read book The Effects of Irreversibility and Uncertainty on Capital Accumulation written by Andrew B. Abel and published by . This book was released on 1995 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: When investment decisions cannot be reversed and returns to capital are uncertain, the firm faces a higher user cost of capital than if it could reverse its decisions. This higher user cost tends to reduce the firm's capital stock. Opposing this effect is the irreversibility constraint itself: when the constraint binds, the firm would like to sell capital but cannot. This effect tends to increase the firm's capital stock. We show that a firm with irreversible investment may have a higher or a lower expected capital stock, even in the long run, compared to an otherwise identical firm with reversible investment. Furthermore, an increase in uncertainty can either increase or decrease the expected long-run capital stock under irreversibility relative to that under reversibility. However, changes in the expected growth rate of demand, the interest rate, the capital share in output, and the price elasticity of demand all have unambiguous effects.
Book Synopsis A Stochastic Control Framework for Real Options in Strategic Evaluation by : Alexander Vollert
Download or read book A Stochastic Control Framework for Real Options in Strategic Evaluation written by Alexander Vollert and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 275 pages. Available in PDF, EPUB and Kindle. Book excerpt: The theoretical foundation for real options goes back to the mid 1980s and the development of a model that forms the basis for many current applications of real option theory. Over the last decade the theory has rapidly expanded and become enriched thanks to increasing research activity. Modern real option theory may be used for the valuation of entire companies as well as for particular investment projects in the presence of uncertainty. As such, the theory of real options can serve as a tool for more practically oriented decision making, providing management with strategies maximizing its capital market value. This book is devoted to examining a new framework for classifying real options from a management and a valuation perspective, giving the advantages and disadvantages of the real option approach. Impulse control theory and the theory of optimal stopping combined with methods of mathematical finance are used to construct arbitrarily complex real option models which can be solved numerically and which yield optimal capital market strategies and values. Various examples are given to demonstrate the potential of this framework. This work will benefit the financial community, companies, as well as academics in mathematical finance by providing an important extension of real option research from both a theoretical and practical point of view.
Book Synopsis Expectations, Adjustment Costs and the Optimal Investment of a Value-maximizing Firm by : Luis Alvarez
Download or read book Expectations, Adjustment Costs and the Optimal Investment of a Value-maximizing Firm written by Luis Alvarez and published by . This book was released on 1993 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Why Demand Uncertainty Curbs Investment by : Maria Elena Bontempi
Download or read book Why Demand Uncertainty Curbs Investment written by Maria Elena Bontempi and published by . This book was released on 2007 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investment under Uncertainty by : Robert K. Dixit
Download or read book Investment under Uncertainty written by Robert K. Dixit and published by Princeton University Press. This book was released on 2012-07-14 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.
Book Synopsis Dynamical Corporate Finance by : Umberto Sagliaschi
Download or read book Dynamical Corporate Finance written by Umberto Sagliaschi and published by Springer Nature. This book was released on 2021-07-29 with total page 206 pages. Available in PDF, EPUB and Kindle. Book excerpt: The way in which leverage and its expected dynamics impact on firm valuation is very different from what is assumed by the traditional static capital structure framework. Recent work that allows the firm to restructure its debt over time proves to be able to explain much of the observed cross-sectional and time-series variation in leverage, while static capital structure predictions do not. The purpose of this book is to re-characterize the firm’s valuation process within a dynamical capital structure environment, by drawing on a vast body of recent and more traditional theoretical insights and empirical findings on firm evaluation, also including asset pricing literature, offering a new setting in which practitioners and researchers are provided with new tools to anticipate changes in capital structure and setting prices for firm’s debt and equity accordingly.
Download or read book Working Paper Series written by and published by . This book was released on 1995 with total page 570 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Computational Economics: A Perspective from Computational Intelligence by : Chen, Shu-Heng
Download or read book Computational Economics: A Perspective from Computational Intelligence written by Chen, Shu-Heng and published by IGI Global. This book was released on 2005-11-30 with total page 318 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This book identifies the economic as well as financial problems that may be solved efficiently with computational methods and explains why those problems should best be solved with computational methods"--Provided by publisher.
Book Synopsis NBER Reporter by : National Bureau of Economic Research
Download or read book NBER Reporter written by National Bureau of Economic Research and published by . This book was released on 1993 with total page 476 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Irreversibility, Uncertainty, and Investment by : Robert S. Pindyck
Download or read book Irreversibility, Uncertainty, and Investment written by Robert S. Pindyck and published by World Bank Publications. This book was released on 1989 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.
Book Synopsis Tobin's Q, Economic Rents, and the Optimal Stock of Capital by : Richard W. Kopcke
Download or read book Tobin's Q, Economic Rents, and the Optimal Stock of Capital written by Richard W. Kopcke and published by . This book was released on 1995 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Investment, Re-procurement and Franchise Contract Length in the British Railway Industry by : Luisa Affuso
Download or read book Investment, Re-procurement and Franchise Contract Length in the British Railway Industry written by Luisa Affuso and published by . This book was released on 2000 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Nominal Income Targeting by : Robert Ernest Hall
Download or read book Nominal Income Targeting written by Robert Ernest Hall and published by . This book was released on 1993 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses nominal income targeting as a possible rule for the conduct of monetary policy. We begin by discussing why a rule for monetary policy may be desirable and the characteristics that a good rule should have. We emphasize, in particular, three types of nominal income targets, which differ in how they respond to past shocks, to prices, and real economic activity. A key question is how any of these rules might be implemented in practice. We suggest that the consensus forecast of future nominal income could playa role in ensuring that the central bank does not deviate from its announced target. To show how economic performance might have differed historically if the Fed had been committed to some type of nominal income target, we offer simulations of a simple model of the economy. According to the simulations, the primary benefit of nominal income targeting would have been reduced volatility in the price level and the inflation rate. Whether real economic activity would have been less volatile is unclear.
