PART 6
REAL FINANCE
In the late 1970s people began to investigate portfolios of industrial projects from the perspective of modern portfolio theory, and the term “real option” was coined for things like the gas property in which having the option not to pump was worth $500,000 on average.
This part will discuss the application of the Nobel Prize-winning principles of Part 5 to real assets, an area in which Probability Management has the potential to play a central role.