IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Investment Under Uncertainty in Egypt: A Real-Options Approach

  • El-Shazly Alaa

    (Department of Economics, Cairo University)

Registered author(s):

    This paper provides a numerical analysis of investment under uncertainty using Egyptian data. It is based on the theoretical foundations that the irreversibility of investment decisions and the uncertainty about their future rewards create a value to waiting for new information before the firm commits resources and incurs unrecoverable costs. Accordingly, the optimal investment policy of the firm balances the value of waiting for new information with the cost of postponing the investment in terms of forgone return. The analytical framework uses diffusion-jump processes to model uncertainty over time and shows that the value of waiting increases with the degree of uncertainty. As a consequence, uncertainty increases the hurdle rate to investment and can become a powerful deterrent to investors.

    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://www.degruyter.com/view/j/rmeef.2004.2.2/rmeef.2004.2.2.1025/rmeef.2004.2.2.1025.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    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.

    Article provided by De Gruyter in its journal Review of Middle East Economics and Finance.

    Volume (Year): 2 (2004)
    Issue (Month): 2 (August)
    Pages: 51-60

    as
    in new window

    Handle: RePEc:bpj:rmeecf:v:2:y:2004:i:2:n:4
    Contact details of provider: Web page: http://www.degruyter.com

    Order Information: Web: http://www.degruyter.com/view/j/rmeef

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

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

    When requesting a correction, please mention this item's handle: RePEc:bpj:rmeecf:v:2:y:2004:i:2:n:4. 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: (Peter Golla)

    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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.