Since 2014
The Real Options Solution To A Cost-Of-Capital Dilemma
Kasarinlan: Philippine Journal of Third World Studies
View Archive Info| Field | Value | |
| Title |
The Real Options Solution To A Cost-Of-Capital Dilemma
|
|
| Creator |
Eagle, David
Senteney, David L. Kiefer, Dean Djatej, Arsen |
|
| Subject |
cost of capital
real options capital budgeting general equilibrium financial theory expected returns rate-of-return paradox |
|
| Description |
The required rate of return should equal the average expected return in the market for the same level of risk. However, firms should only accept such projects with expected returns that exceed this required rate of return. This contradicts our first statement that the required rate of return equals this average expected return for the market. We study this possible paradox in the context of a stochastic general-equilibrium model with endogenous prices. We find that the capitalization of the real options involved in this model explains away this contradiction or paradox.
|
|
| Publisher |
Clute Institute
|
|
| Date |
2010-02-01
|
|
| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
|
| Format |
application/pdf
|
|
| Identifier |
http://clutejournals.com/index.php/JBER/article/view/667
10.19030/jber.v8i2.667 |
|
| Source |
Journal of Business & Economics Research (JBER); Vol. 8 No. 2 (2010)
2157-8893 1542-4448 10.19030/jber.v8i2 |
|
| Language |
eng
|
|
| Relation |
http://clutejournals.com/index.php/JBER/article/view/667/653
|
|