Options

Catalog description

This course will develop state-of-the-art quantitative tools for evaluating large, complex investment projects that cannot be evaluated in a satisfactory manner with standard discounted cash flow techniques. Issues covered include risk-adjusted probability measures and an introduction to modeling project cash flows as financial options. The course will also address financing and distribution policies and restructuring strategies with a special focus on the energy industry. The second half of the course will include valuing capital projects using discrete time and continuous time option pricing models. Special attention will be paid to actual and strategic real option problems in energy finance such as off-shore exploration and power plant management. (2 credit hours)