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BU5556: REAL OPTIONS AND DECISION MAKING (2020-2021)

Last modified: 05 Aug 2021 13:04


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 Aberdeen Sustained Study No
Co-ordinators
  • Dr Juergen Bracht

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 Master Of Science In Law And Economics Of Oil And Gas (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.


Contact Teaching Time

Information on contact teaching time is available from the course guide.

Teaching Breakdown

More Information about Week Numbers


Details, including assessments, may be subject to change until 30 August 2024 for 1st half-session courses and 20 December 2024 for 2nd half-session courses.

Summative Assessments

Essay

Assessment Type Summative Weighting 20
Assessment Weeks Feedback Weeks

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Learning Outcomes
Knowledge LevelThinking SkillOutcome
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Exam

Assessment Type Summative Weighting 80
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Learning Outcomes
Knowledge LevelThinking SkillOutcome
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Formative Assessment

There are no assessments for this course.

Resit Assessments

Exam

Assessment Type Summative Weighting 100
Assessment Weeks Feedback Weeks

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Learning Outcomes
Knowledge LevelThinking SkillOutcome
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Course Learning Outcomes

Knowledge LevelThinking SkillOutcome
FactualRememberILO’s for this course are available in the course guide.

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