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http://dx.doi.org/10.7545/ajip.2017.6.2.225

Elaboration of Real Options Model and the Adequacy of Volatility  

Sung, Tae-Eung (Korea Institute of Science and Technology Information)
Park, Hyun-Woo (Korea Institute of Science and Technology Information)
Publication Information
Asian Journal of Innovation and Policy / v.6, no.2, 2017 , pp. 225-244 More about this Journal
Abstract
When evaluating the economic value of technology or business project, we need to consider the period and cost for commercialization. Since the discounted cash flow (DCF) method has limitations in that it can not consider consecutive investment or does not reflect the probabilistic property of commercialization cost, we often take it desirable to apply the concept of real options with key metrics of underlying asset value, commercialization cost, and volatility, while regarding the value of technology and investment as the opportunity value. We at this moment provide more elaborated real options model with the effective region of volatility, which reflects the uncertainty in the option pricing model (OPM).
Keywords
Technology valuation; real options method; black-scholes model; volatility; propriety of technology investment;
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Times Cited By KSCI : 6  (Citation Analysis)
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