This paper extends financial option theory by developing a methodology for the valuation of claims on a real asset: an offsho re petroleum lease. Several theoretical and practical problems, not p resent in applying option pricing theory to financial assets, are add ressed. Most importantly, the authors show the necessity of combining option pricing techniques with a model of equilibrium in the market for the underlying asset (petroleum reserves). The advantages of this approach over conventional discounted cash flow techniques are empha sized. The methodological development provides important insights for both company behavior and government policy. Promising empirical res ults are reported. Copyright 1988, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 103 (1988) Issue (Month): 3 (August) Pages: 479-508 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Related research
Keywords:
Other versions of this item:
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.
Did you know? You can create a compilation of all publications of a group of people, say alumni of a program, your students or memers of an association.