Polit > Summer Schools > 2012 > Investment Theory

Investment Theory

Master course

Lecturer: Mich Tvede, e-mail: Mich.Tvede@econ.ku.dk
Time and Place: August 6th - August 17th in CSS
Lectures: 9-12 every working day
Class: 13-15 every working day

Investment projects typically consist of an initial investment and some uncertain dividend. An example could be to build a factory and sell the produce at an uncertain market price. In the course investment projects are seen as flexible in the sense that investor is able to decide when to invest rather than facing the choice between investing now or not investing. Moreover there may be other flexibilities in investment projects such as the possibilities to stop the project and to expand the project. Due to the flexibility the usual NPV rule (if the net present value is positive, then invest) turns out to be wrong. Indeed it is necessary to take the flexibility into account. In the course a theory, where the options or flexibilities in investment projects are priced, is developed. All necessary theory is introduced In the course.

The exam will be a written 3 hour closed book exam.

More information on the content and academic aims of the course can be found in the course catalogue