REAL OPTIONS AND CORPORATE RISK MANAGEMENT
By formulating an integrated strategy that combines the creation and exercise of real options together with other risk management techniques, management can reduce risk and thereby increase firm value. For example, a company that is in a position to delay investing without losing its competitive edge, to abandon a project that becomes unprofitable, or to adjust its operating strategy at low cost can avoid risks and exploit profitable opportunities. But, even when real options are used in this way to limit the risk profile of the firm, financial derivatives can help to hedge any residual risk that would otherwise affect the value of the real options and the overall firm. 2000 Morgan Stanley.
Year of publication: |
2000
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Authors: | Triantis, Alexander J. |
Published in: |
Journal of Applied Corporate Finance. - Morgan Stanley, ISSN 1078-1196. - Vol. 13.2000, 2, p. 64-73
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Publisher: |
Morgan Stanley |
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