This paper analyzes the impact of model complexity on the valuation of a project financed power plant along two dimensions: The NPV distribution and the expected cumulative default probability of the project. Model complexity is separated into forecast and simulation complexity. Thereby, we aim...

This paper analyzes the impact of model complexity on the net present value distribution and the expected default probability of equity investments in project finance. Model complexity is analyzed along two dimensions: simulation complexity and forecast complexity. We aim to identify model...

Pricing option contracts on electricity remains methodologically challenging, with a lack of clearly defined and robust methods. In particular, little is known about pricing options in Brazilian energy markets, despite their economic significance. Using weekly price data (R$/MWh) on four...

Pricing option contracts on electricity remains methodologically challenging, with a lack of clearly defined and robust methods. In particular, little is known about pricing options in Brazilian energy markets, despite their economic significance. Using weekly price data (R$/MWh) on four...

There are two basic ways to produce steel on a large scale: using iron ore and coal in blast furnaces or employing ferrous scrap in electric arc furnaces. The first requires a larger initial investment but is more competitive in terms of scale gains. The disadvantage is the need for...

Steel is an alloy composed of iron and carbon for which there are two main large-scale production processes: using iron ore and coal as raw materials through a method known as integrated plants with blast furnaces and using iron scrap melted in electrical furnaces, also known as mini-mills or...