We illustrate the impact that real options generally available to firms can have on the value of corporate equity, and in particular the valuation errors that are likely to arise from ignoring them. Moreover, we develop real option values in terms of the profitability and balance sheet...

A number of authors have used the portfolio standard deviation to model the risk reduction advantages of naive diversification. Other authors have pointed out that when risk is modelled by the portfolio's variance the modelling process becomes much simpler and is computationally more efficient....