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Financial and Real Options Exercises and Templates

On this page you can download files that simulate various different real options so that you can evaluate the files and add similar types of analyses to your models. The first set of file are various files on working with options models, futures prices and forward interest rates.

The second set of files addresses real options. The order of the files associated with real options correspond to the discussion in Chapter 5 of the Valuation Mirage text. The file below contains exercises that walk through the mechanics of measuring the value of the option to expand an investment

Options Models, Futures Prices and Forward Interest Rates

File that walks through how to simulate exploration or research option in various stages with given probabilities to cancel at different stages. You input stage lengths, probabilities of the stages being successful and the costs of each stage as well as the ultimate cash flow if the whole project is successful. You can then evaluate the relative importance of each expenditure.

File that simulates development option to cancel with volatility and mean reversion. The tricky part is to evaluate the value of the investment project in different scenarios without looking ahead.

File that simulates delay option at after development. The difficult part is re-evaluating the question of whether the project should be delayed and re-computing the economics of the project with different delay periods.

File that simulates the option to cancel at different stages of construction and opeartion. The general idea is similar to contracting option except that it must be evaluated on a dynamic basis which makes the proceess more complex.

File that walks through how to create Black-Scholes and Black model for standard financial options.

File that includes the binomial tree approach to modelling options.