presentation ut vince appreciate response request speak class real options thought might enjoy following exchange emails occurred yesterday perhaps issues could addressed talk jim original message sheridan titman sent friday march 31 2000 9 11 jim dyer subject real options course feedback jim student raised difficult questions would recommend ehud thought finance people answers cases complete markets rely decision science people cases incomplete markets would help come 6 pm class couple weeks sheridan sheridan titman department finance college business administration university texas austin texas 78712 1179 512 232 2787 phone 512 471 5073 fax titman mail utexas edu original message jim dyer sent thursday march 30 2000 4 37 pm sheridan titman subject real options course feedback sheridan classes want miss kidding actually probably told suggest someone else would good choice discuss use option theory context incomplete markets address types questions raised note student jim original message sheridan titman sent thursday march 30 2000 5 58 pm jim dyer subject real options course feedback jim teach time sheridan sheridan titman department finance college business administration university texas austin texas 78712 1179 512 232 2787 phone 512 471 5073 fax titman mail utexas edu original message jim dyer sent thursday march 30 2000 11 32 sheridan titman subject fw real options course feedback sheridan see comments mean put spot announced anything class hoping could visit class hour one thursday afternoon discuss views regarding applications option pricing concepts real options reminder attached course outline chris kenyon schlumberger speaking april 13 vince kaminski tentatively agreed speak april 20 going town april 27 leaves either next thursday april 6 may 4 would either times work thinking preparation informal discussion philosophical issues related real options work jim original message jim dyer sent thursday march 30 2000 1 24 pm jclevenger optionii bus utexas edu subject real options course feedback josh thoughtful observations know invited one finance professor class arundel town plan invite sheridan titman discuss issue using option models situations underlying security traded think important face issue actually covered theoretical level last couple readings issue volatility also excellent issue discussion suggest far looking cases volatility given problem finding objective measure volatility project reminds problem finding correct risk adjusted discount rate surprising since concepts almost two sides plate one approach course modeling using traditional decision analysis tools including subjective probabilities finance people write options articles like think ideas try address issues detail semester continues think important surface points early come back seen apply methods naive sort way thanks feedback comments jim original message jclevenger optionii bus utexas edu sent thursday march 30 2000 8 42 jim dyer bus utexas edu cc josh clevenger reliantenergy com subject real options course feedback overcoming initial hope overload materials tools presented thus far semester appears achieving objective making us comfortable optionality valuation applied variety problems outside borders defined liquid market traded financial elements constructive feedback forthright us marking areas subject still controversial also realize rightly real world application type analysis without robust understanding finance may degenerate succession assumptions result house cards effect opinion point two issues potentially make brake importance persuade superiors accept methods valuations outside realm projects whose value primarily driven value commodities backed financial instruments issues easy guess 1 discounting risk free rates sense anyone class put forth convincing arguments proper application time value questions absence liquidity someone within finance department present firmer position question 2 volatility found winston examples metric succinct would recommend future years dedicate hours class time subject criticism relates messy problems anticipate arguments real option applications based dispute volatility measures conservative financial manager would argue two implied volatility derived industry specific slice equity options shotgun approach projects valued tranche may fact significantly different outcome variance weighted average measured equities utilized oil gas electricty good examples major players competing many different levels value chain smaller companies exist dedicated one strata projects want exploit opportunies across strata vertically integrated company two b based following skepticism real option value proposed new business venture new unexploited opportunity paradox embedded increased value based high volatility new ventures high risk failure skepticism likely less acute high tech sectors huge upside new ventures paraded us daily nasdq touts much harder sell mature industries particular interest power industry investments centered around opportunities arising restructuring electricity natural gas sectors regulation removed large proportion risk embedded ongoing changes public policy international basis intentionally screwed example anyone financial genius correctly asses volatility u companies investing seed projects mexico based speculation inevitable dismantling national utility cfe pemex james dyer fondren centennial chair business department management science information systems cba 5 202 university texas austin austin texas 78712 1175 email j dyer bus utexas edu telephone 512 471 5278 fax 512 471 0587