About the Book
Praise for Real Options Analysis Course
"Dr. Mun's latest book is a logical extension of the theory and application presented in Real Options Analysis. More specifically, the Real Options Analysis Course presents numerous real options examples and provides the reader with step-by-step problem-solving techniques. After having read the book, readers will better understand the underlying theory and the opportunities for applying real option theory in corporate decision-making."
-Chris D. Treharne, President, Gibraltar Business Appraisals, Inc.
"This text provides an excellent follow up to Dr. Mun's first book, Real Options Analysis. The cases in Real Options Analysis Course provide numerous examples of how the use of real options and the Real Options Analysis Toolkit software can assist in the valuation of strategic and managerial flexibility in a variety of arenas."
-Charles T. Hardy, PhD, Chief Financial Officer & Director of Business Development, Panorama Research, Inc.
"Most of us come to real options from the perspective of our own areas of expertise. Mun's great skill with this book is in making real options analysis understandable, relevant, and immediately applicable to the field within which you are working."
-Robert Fourt, Partner, Gerald Eve (UK)
"Mun provides a practical step-by-step guide to applying simulation and real options analysis-invaluable to those of us who are no longer satisfied with conventional valuation approaches alone."
-Fred Kohli, Head of Portfolio Management, Syngenta Crop Protection Ltd. (Switzerland)
Table of Contents:
CHAPTER 1: INSTALLING THE SOFTWARE. Installing Crystal Ball Monte Carlo Simulation Software.
Installing Real Options Analysis Toolkit Software.
CHAPTER 2: GETTING STARTED WITH THE SOFTWARE.
Getting Started with Crystal Ball Software.
Getting Started with Real Options Analysis Toolkit Software.
CHAPTER 3: FRAMING REAL OPTIONS.
Step 1. Qualify List of Projects and Strategies.
Step 2. Forecast Base-Case Variables for Each Project.
Step 3. Create Static DCF Models for Each Case.
Step 4. Monte Carlo Simulation—DCF Outputs Become Real Options Inputs.
Step 5. Framing the Real Options.
Step 6. Options Analytics, Simulation, and Optimization.
Step 7. Reports, Presentations, and Update Analysis.
CHAPTER 4: THE BASICS OF FINANCIAL MODELING.
Financial Analysis.
Monte Carlo Simulation.
Volatility Estimates.
CHAPTER 5: THE BASICS OF REAL OPTIONS.
Binomial Lattices.
Granularities in Lattices.
State-Pricing Approach to Solving a European Option.
Trinomial Lattices and American Options.
CHAPTER 6: REAL OPTIONS BUSINESS CASES.
Option to Abandon.
Option to Expand.
Option to Contract.
Option to Choose.
Compound Options.
Closed-Form Compound Options.
Sequential Compound Option.
Changing Costs.
Changing Volatility.
Option to Contract and Abandon.
Basic Black-Scholes with Dividends.
Barrier Options.
Stochastic Timing Options.
Switching Option.
Closed-Form Equations and Binomial Convergence.
Nonrecombining Lattices.
CHAPTER 7: EXTENDED PROBLEMS: COMBINING FORECASTING, DCF MODELING, REAL OPTIONS, AND OPTIMIZATION.
CHAPTER 8: EXERCISE SOLUTIONS.
CHAPTER 9: REAL OPTIONS ANALYSIS TOOLKIT SOFTWARE FUNCTION DESCRIPTION FOR EXCEL.
CHAPTER 10: REAL OPTIONS TABLES.
Real Options Value Tables.
Implied Volatility Tables.
Dividend Impact Tables.
APPENDIX.
CASE STUDIES.
More, Faster, Cheaper—The Siren Call of Upstream R&D.
Real Options Analysis Applied to Valuing Start-Up Entities: The Digital News, Inc.
About the CD-ROM.
Index.
About the Author :
DR. JOHNATHAN MUN is Vice President of Analytical Services at Decisioneering, Inc., the makers of Crystal Ball® analytical software. His duties focus primarily on heading up the development of real options and financial analytics software powered by Crystal Ball®. Prior to joining Decisioneering, he was a consulting manager and financial economist in the Valuation Services and Global Financial Services practice of KPMG Consulting, and a Manager with the Economic Consulting Services practice at KPMG LLP. During his tenure at KPMG Consulting and at Decisioneering, he has taught, advised, consulted, and applied real options analysis at multiple firms including Unilever, BP, Credit Suisse, Motorola, Intel, and El Paso Electric. He is also currently a visiting professor in finance, economics, and statistics at various universities, including University of Applied Sciences (Germany), Swiss School of Management (Switzerland), and Golden Gate University (California). Mun is the author of Real Options Analysis, also published by Wiley. He continues to offer worldwide seminars and lectures on the topics of real options, simulation and risk analysis, and corporate finance.
DR. JOHNATHAN MUN is Vice President of Analytical Services at Decisioneering, Inc., the makers of Crystal Ball® analytical software. His duties focus primarily on heading up the development of real options and financial analytics software powered by Crystal Ball®. Prior to joining Decisioneering, he was a consulting manager and financial economist in the Valuation Services and Global Financial Services practice of KPMG Consulting, and a Manager with the Economic Consulting Services practice at KPMG LLP. During his tenure at KPMG Consulting and at Decisioneering, he has taught, advised, consulted, and applied real options analysis at multiple firms including Unilever, BP, Credit Suisse, Motorola, Intel, and El Paso Electric. He is also currently a visiting professor in finance, economics, and statistics at various universities, including University of Applied Sciences (Germany), Swiss School of Management (Switzerland), and Golden Gate University (California). Mun is the author of Real Options Analysis, also published by Wiley. He continues to offer worldwide seminars and lectures on the topics of real options, simulation and risk analysis, and corporate finance.
