Real Options Literature Review

Abstract

After 30 years of discussion and research, the academic community has established a complete theoretical system of real options and provided an excellent framework for the use of real options theory in the investment appraisal of high-tech projects. An option is an entitlement without any obligation and it has been used to describe a variety of management decisions in business investment. The description of management is effective and proper. Due to the in- troduction of real options theory, there has been a major breakthrough in the investment area. Project evaluation is the core content of bank credit risk assessment and business evaluation. The core content never changes from the invest- ment evaluation framework to the credit risk evaluation framework. The project evaluation meets various needs of sub- ject s in different ways. In this paper, the importance of real options is analyzed and the literature is reviewed.