The application of real options as a tool for decision-making in the electricity market

Monica Andrea Arango Arango, Sergio Botero Botero

Research output: Contribution to conferencePaper

3 Scopus citations

Abstract

© 2017 AISTI. Traditional valuation methods such as Net present value (NPV) underestimate the value of projects when they face flexibility, that is to say, it does not know the actions of the managers in the face of changes in market conditions. The application of real options (OR) complements the results obtained by traditional methods, avoiding the possible underestimation of the value of investment projects. The Monte Carlo simulation used in the estimation of the OR opens the possibility of deriving the value of the option using empirical distributions on the returns of the underlying generating a series of trajectories, broadening the spectrum for the electricity market investor.
Original languageAmerican English
DOIs
StatePublished - 11 Jul 2017
EventIberian Conference on Information Systems and Technologies, CISTI -
Duration: 11 Jul 2017 → …

Conference

ConferenceIberian Conference on Information Systems and Technologies, CISTI
Period11/07/17 → …

Fingerprint

Dive into the research topics of 'The application of real options as a tool for decision-making in the electricity market'. Together they form a unique fingerprint.

Cite this