DESC 621 Valuation of Real Options (2)

In this course, students are presented with analytical techniques that apply option pricing methods, which were initially developed for financially-traded instruments, to the valuation of options on real assets. The “real option” approach to asset valuation quantifies the value of managerial flexibility, which is typically not captured in standard discounted cash flow valuation approaches. The course includes a review of the fundamental theory of decision analysis and options as well as an introduction to numerical techniques for solving dynamic programming problems, such as binomial lattices and trees. Hands-on experience with software tools used for the numerical analysis of problems using these ideas is also provided. Prerequisite(s): Full-Time–DESC 603 Quantitative Business Analysis (2) or DESC 618 Applied Data Analytics (3). Fully Employed–DESC 656 Quantitative Analysis for Business Operations (4).

Grading Basis: Graded