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BU5556: REAL OPTIONS & DECISION MAKING (2018-2019)

Last modified: 22 May 2019 17:07


Course Overview

The goal of this course is to deepen and broaden students' understanding and develop their analytical skills regarding investment decisions under uncertainty and the value of flexibility and information. The course will introduce relevant concepts from economics and finance such as decision trees, the Black-Scholes equation and the binomial option pricing model and discuss how these concepts may be applied to assess investments with applications related to the energy industry such as the development of an oil lease.

Course Details

Study Type Postgraduate Level 5
Session Second Sub Session Credit Points 15 credits (7.5 ECTS credits)
Campus None. Sustained Study No
Co-ordinators
  • Professor Joseph Swierzbinski

What courses & programmes must have been taken before this course?

  • One of MRes Applied Economics (Studied) or MSc Applied Economics (Studied) or MSc Applied Economics (Health) (Studied) or MSc (Econ) in Petroleum, Energy Economics and Finance (Studied) or Master Of Science In International Finance (Studied) or Master Of Science In International Finance (Includes Cfa Exam) (Studied) or Master Of Science In Financial Mathematics (Studied)
  • Any Postgraduate Programme (Studied)

What other courses must be taken with this course?

None.

What courses cannot be taken with this course?

None.

Are there a limited number of places available?

No

Course Description

The course will introduce concepts from economics and finance related to investment under uncertainty and consider some of the methods that have been developed in these fields, such as the Black-Scholes equation and binomial option pricing model. The course will also review examples that show how methods originally developed to assess financial investments can be adapted to evaluate investments in real assets, such as machinery or oil leases. Examples of the types of investment decision that may be considered in this course include: (1) the option to defer an investment such as the development of a leased tract which may contain oil; (2) the conduct of a research programme for producing information such as a programme of exploration for oil; and (3) the option to abandon or suspend a project.

Further Information & Notes

The course is compulsory for students in the MSc in Petroleum, Energy Economics and Finance. 

Degree Programmes for which this Course is Prescribed

  • Master Of Science In Financial Mathematics
  • Master Of Science In International Finance
  • Master Of Science In International Finance (Includes Cfa Exam)
  • Master Of Science In Law And Economics Of Oil And Gas

Contact Teaching Time

76 hours

This is the total time spent in lectures, tutorials and other class teaching.

Teaching Breakdown

  • 1 Lecture during University weeks 25 - 35
  • 1 Tutorial during University weeks 25 - 35

More Information about Week Numbers


Summative Assessments

1x 2hr written examination (80%) and one assessed assignment/essay (20%).

Resit: 100% on 2 x hour written examination.

Formative Assessment

There are no assessments for this course.

Feedback

None.

Course Learning Outcomes

None.

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