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Essay's paper info
Topic: Business
Number of pages / Number of words: 27 / 7528
Essay's paper body

It captures tbe

contingencies of real options and addresses nearly all of

90 HARVARD BUSINESS REVIEW

Manage Real Options

Real options don't have to

be a black box. Here's an

approach that not only

the math of options

tbe most commonly voiced criticisms

of using option tbeory to

manage tbose contingencies...


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aOOUt exerClSmg t h e m .

Much ofthe gap between the theoretical

and realized values of companies'growtb projects

may be tbe result of a disconnect between tbe way managers

value options and tbe way they manage them-a

problem tbat, incidentally, applies to both real and financial

options.

In calculating real-option values, most managers, academics,

and consultants assume that option bolders will

always make optimal exercise decisions-timely cboices

based on rational analyses of all tbe available information...


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