Transcript
  • 00:01    |    
    Initial credits
  • 00:20    |    
    Introduction by Robert S. Pindyck
  • 00:40    |    
    Financial options
    • Call options
    • Real options
  • 05:00    |    
    Investment decisions
    • Net present value (NPV)
    • Cost of the investment
    • Sleeping patents
    • NPV rule
    • Limitations of the NPV rule: uncertainty
  • 09:25    |    
    Risks implied in the oil investment
    • Volatility of the oil prices
    • Evaluation of the oil reserve: net present value
    • Oil reserve: a call option
    • Undeveloped oil reserves in a company
    • Risks in refining companies
  • 17:01    |    
    Risks in building a widget factory
  • 19:02    |    
    Patents
    • Problems with rotten tomatoes
    • Calgene: patent of the gene that rottens tomatoes
    • Real options and the purchase of Calgene
    • Traditional methods of analyzing this risk
  • 26:23    |    
    Risks in building a power plant
  • Relation between flexibility and efficiency
  • 28:37    |    
    ¿How does uncertainty favor the market for a patent?
    • The marketing of a patent
    • A marketable product: the consumer opinion
    • Relation between demand and options
  • 34:45    |    
    The value of a company: current capital and options
  • 37:24    |    
    Decisions of managers when considering options
    • Analysis of the future value of oil
    • The underestimation of uncertainty
    • Caterpillar case
  • 43:42    |    
    Value of a call option of a stock
    • Limitations of the Monte Carlo approach
    • Advantages of financial option techniques
    • Limitations of the NPV rule: fixed scenario
  • 48:04    |    
    The discount rate in diverse risks
    • Limitations of a subjective increase in a discount rate
    • The present value of a stock and a currency
  • 52:54    |    
    Determination of the appropriate time to invest
    • Opportunity cost and a flexible investment
    • Value of financial options: a portfolio
    • Interpretation of an option graph
  • 57:27    |    
    A firm: collection of real options
    • Difference between a firm and an individual
    • Real options in everyday life: marriage
  • 01:01:48    |    
    Impact of uncertainty on investment: tax rates
  • 01:03:38    |    
    Anadarko petroleum
  • Operation in Algeria: political uncertainty
  • 01:06:06    |    
    Should universities continue teaching the net present value technique?
    • Stable markets and net present value
    • Construction and land
  • 01:09:49    |    
    Option to build a project
    • Dividends
    • Optimal exercise point
    • Evaluating the investment opportunity and the exercise point
  • 01:15:25    |    
    Difficulty of teaching the option theory
  • 01:16:24    |    
    Interpretation of the equilibrium between exercise point and investment opportunity
  • 01:19:05    |    
    Unequal oil reserves in every company
  • 01:19:57    |    
    Devaluation of the U.S. dollar and trade deficit
  • The option of a copper mine in the U.S.
  • 01:22:46    |    
    Knowledge needed to open a copper mine
    • Value of the copper mine
    • Volatility of the mine
    • Interest rate
    • Payoff rate
    • Volatility and the payoff rate
  • 01:26:14    |    
    Final words
  • 01:26:31    |    
    Final credits


Introduction to the Theory of Real Options

New Media  | 15 de febrero de 2005  | Vistas: 3640

About this video

Robert S. Pindyck introduces the theory of real options and other related subjects. He begins by defining a financial option, which can be subdivided into a call option and a real option, the latter focusing on the application of the capital investment theory through the option theory method. He exemplifies this by stating that a hypothetic company, that is considering a capital investment to build a factory, builds it and uses its cost as the exercise price of the action. He also comments on the net present value (NPV), illustrates the costs of investments and describes the risks implied in oil investments. He talks about patents, the value of a company, and shares examples of both subjects. Furthermore, Pyndick analyzes the decision of managers when considering options, how uncertainty is often underestimated and through the interpretation of an option graph, he indicates the appropriate time to invest.

Credits

Introduction to the Theory and Application of Real Options
Robert S. Pindyck

Student Center, CE-200
Universidad Francisco Marroquín
Guatemala, February 15, 2005

A New MediaUFM production. Guatemala, February 2005
Camera: Jorge Samayoa; digital editing: Jorge Samayoa; index: Christiaan Ketelaar; synopsis: Sebastian del Buey; synopsis reviser: Daphne Ortiz; publication: Pedro David España




Conferencista

Robert S. Pindyck is Professor of Economics and Finance in the…