• Asian Journal of Innovation and Policy
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• v.5 no.2
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• pp.197-207
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• 2016

This paper seeks to measure the monetary value of technical development in the deep seabed manganese nodule mining by applying the compound option model (COM). The COM is appropriate for the project in terms of its decision-making structure and embedded uncertainty. The estimation results show that the deep seabed mining project has more economic potential than shown by the previously obtained results from the discounted cash flow (DCF) analysis. In addition, it is reasonable to invest in the project taking the various uncertainty factors into consideration, because the ratio of the value to the cost of the project is far higher than one. This information can be utilized in national ocean policy decision-making.

• Industrial Engineering and Management Systems
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• v.12 no.3
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• pp.264-273
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• 2013

Credit option is a policy that has been studied by many researchers in the area of supply chain management. This policy has been applied in practice to improve the profits of supply chain members. Usually, a credit option policy is proposed by the seller, and often under a symmetric information environment where members have complete information on each others' operations. In this paper, we investigate two scenarios: firstly, the seller offers a credit option to the buyer, and secondly, the buyer attempts to stretch the length of the credit period offered by the seller. The proposed model in both scenarios will be investigated under an asymmetric information structure where some information are private and are only known to the individual who has knowledge of this information. The interactions between buyer and seller will be modeled by non-cooperative Stackelberg games where the buyer and seller take turn as leader and follower. Among some of the numerical results obtained, the seller and buyer's profits obtained from symmetric information games are larger than those obtained from an asymmetric information game in both scenarios. Furthermore, both buyer and seller's profit in the second scenario are better than in the first scenario.

• Journal of Distribution Science
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• v.12 no.3
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• pp.65-73
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• 2014

Purpose - Aging and fewer economically active people have challenged the assumption of continuous population increases. A new real estate valuation methodology reflecting changes in population structure is thus needed. Research design, data, and methodology - The relationship between demographic change and changes in real estate prices is analyzed using ordinary least squares (OLS) to estimate the parameters, and a population structure change (PSC)-Binomial Option Model is developed to assess the volatility of the estimated parameters. Results based on Seoul and Shanghai data are compared. Results - Results of the DCF method indicate that investing in Seoul is better than investing in Shanghai, but the binomial option indicates the opposite. The PSC-binomial option model, reflecting changes in population structure, yields higher values (24.6 million won in Seoul and 43.3 million won in Shanghai) than those given by the binomial option model. Conclusions - This study indicates that applying changes in population structure to existing research, such as in the binomial option model, represents a more accurate real estate valuation method. Results demonstrate that the new model is more accurate than existing models such as the DCF or binomial option.

• Asian Journal of Innovation and Policy
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• v.7 no.1
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• pp.178-189
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• 2018

In this paper, we present a case study of a new emerging business startup involved in smart house appliances. The irreversible investment concept and real-option theory are introduced as the fundamentals of the model. By using games theory we show that the startup's actions can trigger reactions from other firms. The first part covers initial the research and development stage, while the second part covers production and commercialization. The findings of this study suggest that, given a certain amount of initial investment, an open and shared innovation may lead to hurting a firm's investment while strengthening the competitors' position in the market. However, given the sensitivity analysis, when volatility and demand grow favorably, sharing R&D investment is not a bad option for a new player to adjust its position in the market while still maintaining positive returns.

• Journal of the Korean Institute of Electrical and Electronic Material Engineers
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• v.26 no.9
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• pp.690-700
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• 2013

This study reviewed how the changes of the government policy on solar power generation projects affected the annual mandatory quotas of the regulated power providers under the RPS (renewable portfolio standard) system and analysed economic feasibility of the investment for meeting their quotas as compared to the case of non-regulated power providers. The analysis results showed that under the discount rate of 7.5%, which was used for the annual national electricity plans for the recent years, both the regulated and non-regulated power providers achieved economic feasibility under both the NPV (net present value) method and the real option pricing method. It was also shown that higher profitability was attained by non-regulated power providers than by their regulated counterparts, which can be attributable to the fact that regulated providers are required to out-source 50% of the total quota. The results of this study are considered to be useful for establishing a meaningful mid term or long term strategy for the future of solar power generation linked to the current RPS system.

• Journal of Radiation Protection and Research
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• v.45 no.4
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• pp.147-153
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• 2020

Background: Malawi's 2018 National Energy Policy includes nuclear power as an energy option with an operational 100 MW targeted for 2035. Materials and Methods: This paper challenges the scope of the policy on nuclear power by reviewing its implementation strategy and comparing it to: the strategy established for coal in the same policy; some experiences from other countries; and documents by the International Atomic Energy Agency (IAEA) relating to establishing a national position on nuclear power and infrastructural requirements for a nuclear power program. Results and Discussion: It is found that the pro-nuclear position is uninformed, and targets are unrealistic owing to a lack of understanding of nature of nuclear power including the requirements for safety, security and safeguards, and nuclear infrastructure. It is apparent that neither consultation nor a proper analysis were comprehensively conducted for nuclear. Though the national energy policy suggests a national position for nuclear energy, the content does not demonstrate that the position was arrived at knowledgeably. Conclusion: Thus, nuclear power may presently be viewed as a potential energy option that is yet to be seriously considered. It is important to build an appropriate level of literacy on nuclear science and technology for policy makers, key stakeholders, and the public to be better positioned for strategizing on nuclear power.

• Journal of Korean Society of Transportation
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• v.30 no.6
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• pp.13-26
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• 2012

In this study, factors influencing the parking policy compliance (i.e. levying a garage option on car buyers) were identified, and then, were applied to the theory of planned behavior. To find out the influence of factors and their path, the study built a parking policy compliance model using structural equation modeling. The independent variables such as attitude, subjective norm, perceived behavioral control had positive effects on the parameter describing the efforts to secure his garage, but the parameter impact on the dependent variable was not significant. In the end, the independent variables affected the dependent variable was not significant. The perceived behavioral control utilizing regulations had positive effects on the parking policy compliance behavior, but past behavior such as street parking and prowling to find a free parking space had a negative effect on parking policy compliance behavior.

• The Korean Journal of Financial Management
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• v.1 no.1
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• pp.133-149
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• 1985

The theory of option pricing has undergone rapid advances in recent years. Simultaneously, organized option markets have developed in the United States and Europe. The closed form solution for pricing options has only recently been developed, but its potential for application to problems in finance is tremendous. Almost all financial assets are really contingent claims. Especially, Black and Scholes(1973) suggest that the equity in a levered firm can be thought of as a call option. When shareholders issue bonds, it is equivalent to selling the assets of the firm to the bond holders in return for cash (the proceeds of the bond issues) and a call option. This paper takes the insight provided by Black and Scholes and shows how it may be applied to many of the traditional issues in corporate finance such as dividend policy, acquisitions and divestitures and capital structure. In this paper a combined capital asset pricing model (CAPM) and option pricing model (OPM) is considered and then applied to the derivation of equity value and its systematic risk. Essentially, this paper is an attempt to gain a clearer focus theoretically on the question of corporate stock risk and how the OPM adds to its understanding.

• Journal of Digital Convergence
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• v.7 no.1
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• pp.73-80
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• 2009

In this study, the pricing performances of alternative simple option models are examined by creating a simulated market environment in which asset prices evolve according to a stochastic volatility process. To do this, option prices fully consistent with Heston[9]'s model are generated. Assuming this prices as market prices, the trading positions utilizing the Black-Scholes[4] model, a semi-parametric Corrado-Su[7] model and an ad-hoc modified Black-Scholes model are evaluated with respect to the true option prices obtained from Heston's stochastic volatility model. The simulation results suggest that both the Corrado-Su model and the modified Black-Scholes model perform well in this simulated world substantially reducing the biases of the Black-Scholes model arising from stochastic volatility. Surprisingly, however, the improvements of the modified Black-Scholes model over the Black-Scholes model are much higher than those of the Corrado-Su model.

• Korean Management Science Review
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• v.32 no.1
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• pp.1-13
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• 2015

We estimate the option value embedded in reverse mortgages using the framework of European put option. The reverse mortgage is a very useful financial product for senior citizens who own homes but do not have a cash income while it is a high risk one from lender's perspective. One of benefits of the reverse mortgages is that the debt limit is restricted to the scope of the disposition price of the collateralized house, which is considered a put option to borrowers. The put option is evaluated using Black-Scholes model and a sensitive analysis is performed on variables such as discount rate, volatility, and time period. We confirm that the option value of reverse mortgages increases rapidly as the borrowers live longer than their life expectancy. The results of this study can be used to promote the reverse mortgage program more effectively in order to solve the problem of income shortage of the elderly homeowners.