Modified Model of Optional Pricing for Real Assets Value Aiming at Leaking Losses
Wang Zong-jun · Commercial Research · 2003
Value-leaking losses are the common phenomenon in real assets pricing. The losses stem from the cash flow and convenience value ratio between decision points, which changes the evolutionary routine of real assets value thereby affecting the option value and optimum time for decisions. To properly appraise the optional value, the optional pricing model should be modified to account for the value leaking losses of real assets.