The Role of Uncertainity in Investment: An Examination of Competing Investment Model Using Commercial Real Estate Data
- Topics:
- Real Estate Portfolio Management
- Tags:
- Business Operations,
- Commercial Real Estate,
- Finance,
- Investment,
- Investment Decision,
- Real Estate,
- Real Estate Economics
- Source:
- Real Estate Economics
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Overview: Neo-classical investment decision criteria suggest that only the systematic component of the total risk affect the rate of investment, as channeled through the built-asset price. Alternatively, option-base investment model suggests a direct role for total uncertainty in investment decision marketing. To sort out uncertainty role in the investment, they estimate a structural model of asset-market equilibrium. Empirical results generally favor predictions of the option-based model and hence suggests that irreversibility and delay are important considerations to investors. The findings also have implications for macroeconomics and for forecast of cyclical investment activity.
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Format: PDF | Size: 2,529KB | Date: Jan 2003 | Pages: 32
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