Advanced Search
MyIDEAS: Login

Investment Analysis In Agriculture

Contents:

Author Info

  • Tauer, Loren W.

Abstract

Recent developments in investment analysis and their relevancy in agricultural investment assessment are discussed. The Net Present Value model can be modified to incorporate the value of strategic management of an investment into the initial evaluation of that investment. Since these decisions can be modeled as call and put options, the mathematics of financial options has been applied to these investment decisions, and referred to as real options analysis. It is shown how contingent claims analysis can be used to value these real options. Contingent claims analysis uses a risk-free discount rate, since risk is incorporated into option valuation using computed risk-neutral probabilities obtained from a replicating portfolio correlated to the discounted income stream. Many net returns in agricultural activities are correlated with prices of underlying agricultural commodities, suggesting the potential use of contingent claims analysis.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. 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.
File URL: http://purl.umn.edu/14763
Download Restriction: no

Bibliographic Info

Paper provided by Cornell University, Department of Applied Economics and Management in its series Staff Papers with number 14763.

as in new window
Length:
Date of creation: 2000
Date of revision:
Handle: RePEc:ags:cudasp:14763

Contact details of provider:
Postal: Warren Hall, Ithaca NY 14853
Fax: 607-255-9984
Web page: http://aem.cornell.edu/
More information through EDIRC

Related research

Keywords: Agricultural Finance;

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Tomek, William G., 2000. "Commodity Prices Revisited," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), October.
  2. Tauer, Loren W., 2000. "Estimating Risk-Adjusted Interest Rates for Dairy Farms," Staff Papers 121149, Cornell University, Department of Applied Economics and Management.
  3. Tomek, William G., 2000. "Commodity Prices Revisited," Staff Papers 121146, Cornell University, Department of Applied Economics and Management.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ags:cudasp:14763. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.