Real Options Analysis: Tools and Techniques for Valuing Strategic Investment and Decisions
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| Author(s) | |
|---|---|
| Pages |
414 |
| Format |
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| Published Date |
2002 |
Completely revised and updated to meet the challenges of today’s dynamic business environment, Real Options Analysis offers you a fresh look at evaluating capital investment strategies by taking the strategic decision-making process into consideration. This comprehensive guide provides both a qualitative and quantitative description of real options; the methods used in solving real options; why and when they are used; and the applicability of these methods in decision making.
Author’s Introduction:
Real Options Analysis provides a novel view of evaluating capital investment strategies by taking into consideration the strategic decision-making process. The book provides a qualitative and quantitative description of real options, the methods used in solving real options, why and when they are used, and the applicability of these methods in decision-making.
In addition, multiple business cases and real-life scenarios are discussed. This includes presenting and framing the problems, as well as introducing a stepwise quantitative process developed by the author for solving these problems using the different methodologies inherent in real options. Included are technical presentations of models and approaches used as well as their theoretical and mathematical justifications.
Real Options Analysis is divided into two parts. The first part looks at the qualitative nature of real options, providing actual business cases and applications of real options in the industry, as well as high-level explanations of how real options provide much-needed insights in decision-making. The second part of the book looks at the quantitative analysis, complete with worked-out examples and mathematical formulae.
Contents:
- A NEW PARADIGM?
- Traditional Valuation Approaches
- Real Options Analysis
- The Real Options Process
- Real Options, Financial Options, Monte Carlo Simulation, and Optimization
- Behind the Scenes
- Real Options Models
- Advanced Options Problems
- Real Options Analysis Toolkit Software
- Results Interpretation and Presentation
Real Options Analysis: Tools and Techniques for Valuing Strategic Investment and Decisions By Johnathan Mun pdf
15 reviews for Real Options Analysis: Tools and Techniques for Valuing Strategic Investment and Decisions
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Chelsea Zuniga (verified owner) –
The book represents a reference in the area, the author is an icon in real options and I found the price very affordable! I loved it!
Hayden Acevedo (verified owner) –
Half of the book is devoted to a tool developped by J.Mun, Either the CD (not included but announced to be in the book) and the downloadable version only have 15th days free licence.
If he wants to sell his tool, the book should be free!
Jakob Peters (verified owner) –
Mun’s book is an excellent guide for those who have basic knowledge about asset valuation and want to study real options.
Quinton Rosario (verified owner) –
The book leads the field in real options analytics and is a must-read for anyone interested in performing such analyses. Dr. Mun has made a formidable subject crystal clear and exponentially easy for senior management to understand. Monte Carlo simulation and Real Options software alone is worth the book price many times over. Excellent job!
Samantha Hoffman (verified owner) –
It is a real-hand-on book! Although the book looks very “huge”, the analysis helps me to prepare MBA class.
Arielle Bravo (verified owner) –
“Dr. Mun has converted his tacit financial knowledge into a digestible user-friendly book. He effectively leads the reader on a solid path starting from Discounted Cash Flow, progressing through Monte Carlo analysis and evolving to Real Options to get even closer to the target of achieving confident corporate decisions. His ability to clearly explain the relationships of popular competing analysis methods will make this a must have reference book for today’s decision makers.”
Sincere Hughes (verified owner) –
Real option analysis = real value! For every individual responsible for significant decisions in their firm or for their clients, this book is a “must have” and “must read” addition to their shelf. For students in decision sciences, finance, operations or program management, this book will be an invaluable resource. For many, this book will be the stepping-stone to a promotion, and for others, the path to substantial profits while planning new or managing existing projects for their company.
Linda Graves (verified owner) –
decent read… did a good job on explaining practical uses of real options. would have been better if not so much written promoting the use of crystal ball. overall, happy to see that minimizes coverage on replicating portfolios and focuses on risk neutral prob. i recommend this book, especially if mba student and brief coverage in intro class of real options leaves you interested / unfulfilled.
Fisher Wade (verified owner) –
This was my first book on Real Options. After this, I complemented my knowledge with more accurate researches on the theoritic foundations on the subject (eg. Trigeorgis and Copeland).
What I liked of this text is that it was a soft landing into the Real Option world, with a simple and easily understandable description. Its major pro is to present transparently the basics of a concept that is often approached at a too high and formal level.
What I did not like is the fact that few chapters at the end were not really useful but full of stuff and formulas with no explanations that cannot practically be used. I had the sensation they were out of place, since I could grasp their meaning only after passing to more comprehensive books.
One more criticism is that you don’t understand the effect of the difference between private and public risk in real options evaluation as you do with other texts. However, I still consider this the book where I formed my basics before being able to master some other more detailed book (but also more difficult to master). The Crystall-Ball package was also a nice surprise. At the end, if you consider the price and the content it was surely good value for money even though it’s not a masterpiece.
Yusuf Norris (verified owner) –
This is an excellent text on Real Options Analysis. There is a definitive very well maintained balance between theory and practice. Dr. Mun will take you through a random walk, which is so natural and so powerfully pragmatic you will appreciate by the time you’ll reach the final pages of the book. The powerful intuition Dr. Mun develops behind stochastic calculus and Ito’s lemma makes it accessible and useful to the businessman who has to learn how to mitigate downside risks while optimizing growth opportunities in an uncertain economy. The book in itself is a real option – The mathematics is nicely explained only when needed for clarity of the subject. The abundant amount of reference is there for you to find out if interested. It is up to you to decide when you wish to exercise your options. If you can identify your real options, Dr. Mun will show you how to value those complex opportunities.
Ashlynn McMahon (verified owner) –
Real option analysis = real value!
For every individual responsible for significant decisions in their firm or for their clients, this book is a “must have” and “must read” addition to their shelf. For students in decision sciences, finance, operations or program management, this book will be an invaluable resource. For many, this book will be the stepping-stone to a promotion, and for others, the path to substantial profits while planning new or managing existing projects for their company.
Real option analysis is a process that incorporates traditional and new analytical techniques. Dr. Mun’s new book is a refreshing, cutting-edge look at a powerful new decision-making process.
As the author of a book on stochastic modeling, I know how difficult it is to make complex concepts clear. Johnathan Mun’s book lays out in clear and concise terms the analytical process, the types of analyses that are available and a broad range of cases showing the versatility of real options analysis. In easy to understand language, with a myriad of illustrations, Dr. Mun takes the reader from the basics to the inner workings of real option analysis. Complex concepts are laid out in plain terms, but the reader can read the technical appendices to learn the intricate details of real option analysis.
It isn’t often you can truthfully say a book breaks new ground, but Johnathan Mun’s book on real option analysis has certainly done just that. I recommend it without reservation to every student or professional involved in any decision-making process.”
(Financial Consulting) Glenn G. Kautt, MBA, CFP, EA
President – The Monitor Group, Inc. and author of “Stochastic Modeling: The New Way to Predict Your Financial Future.”
Cesar Allison (verified owner) –
Mun’s book shows how real options problems, like those faced in the real world, can be solved. Other books may provide a better introduction to real options concepts, but the methods employed are suitable only for very simple problems. Where other approaches require that you develop your own lattices (or other solutions), Mun shows you how to use his Supper Lattice Solver and Monte Carlo simulation software to solve these problems. I am convinced that his approach will not only facilitate the solution of these problems, but will also be more readily accepted by management. I look forward to acquiring Mun’s software and applying it in practice.
Genesis Knapp (verified owner) –
Ok for share traders but not for strategic planners. I wanted to compare options in a large decision tree, but this didn’t’t help.
Evie Wilkins (verified owner) –
What is a “real option”? This kind of option is not a derivative instrument, but an actual option (in the sense of “choice”) that a business may gain by undertaking certain endeavors. For example, by investing in a particular project, a company may have the real option of expanding, downsizing, or abandoning other projects in the future. Other examples of real options may be opportunities for R&D, M&A, and licensing. In corporate finance, real options analysis or applies put option and call option valuation techniques to capital budgeting decisions.
This book is written for both the beginners and as those skilled in real options applications. The book is organized in such a way that each chapter has a brief summary and a list of questions, so you can construct a small exam based on these questions.
The book provides a refreshingly new view of evaluating capital investment strategies by taking into consideration the strategic decision-making process. The book provides a qualitative and quantitative description of real options, the methods used in solving real options, why and when they are used, and the applicability of these methods in decision-making. In addition, multiple business cases and real-life scenarios are discussed. This includes presenting and framing the problems, as well as introducing a stepwise quantitative process developed by the author for solving these problems using the different methodologies inherent in real options. Included are technical presentations of models and approaches used as well as their theoretical and mathematical justifications.
The book consists of two parts. The first part looks at the qualitative nature of real options, providing actual business cases and applications of real options in the industry, as well as high-level explanations of how real options provide much-needed insights in decision-making. The second part of the book looks at the quantitative analysis, complete with worked-out examples and mathematical formulae.
Pros:
– Has a good introduction to real options, suitable for the beginners
– Lots of remarkable, real-world examples
– Gradually progresses from basic to advanced techniques
– Provides some basic financial statement analysis concepts used in applying real options
– Compares financial options with real options; provides major similarities and differences
Leila Clements (verified owner) –
As practitioners and academics continue to grapple with quantifiable uncertainties in real asset decision making, the debate about real option models will no doubt continue.
Johnathan Mun’s second book and more specifically his case study approach allows practitioners from diverse industries to enter the debate with simple excel asset pricing skills. To my mind there is no better pragmatic work on the topic than the second edition of Real Options Analysis. With the book in one hand and the robust SLS software up on the screen – framing, pricing and understanding real options is pretty straightforward.
Two points to note: After 30 days, just as you begin to get hooked on the superb software it is likely to gently expire. That’s when you are saved by the second point; the author is hugely supportive – His `one line insights’ in response to specific queries made this a great purchase.