There is a wide body of literature in corporate finance that examines the tradeoffs between liquidation and re-organization for creditors in financially distressed firms (Kahl (2002), Hotchkiss (1995), Gertner and Scharfstein (1991)). We incorporate salient elements from this literature into a...

Despite a good number of scientific developments in innovation, most studies suggest that the most effective innovation project should be only selected for a group of economic indicators related to investment. In practice, it is necessary to create a method for assessing the effectiveness of...

The purpose of this paper is to rework the building blocks of real option applications and to introduce a basket option framework. We find that the characteristic parameters of the risk neutral density function implied in observed share prices within the real option framework represent a novel...

This article examines an important aspect of federalism: the effect of a secession threat on the union's productivity. Productivity requires a compliance maintenance regime with credible punishment. An exit option gives a government the alternative of opting out of the union rather than suffer...

R&D is often a highly uncertain venture where experiments achieve successful outcomes on an extraordinarily rare basis. Just one successful product could change the future of a company; the discovery stage can often be an invaluable or disastrous experience. We develop a real R&D option model...