Policy, Politics And Public Management Essay Example | Topics and Well Written Essays - 500 words

Policy, Politics And Public Management - Essay Example These are the factors why the size of interest groups in the real estate increases. The impact of these interest groups, who favor moving not just their residential but also their business functions in New Jersey, is apparent in the state's real estate. Since New Jersey is ideally situated in the heart of major cities and seaports in the country, many sectors in the country become part of the interest group, thus providing innovations in the state. According to Thompson (1999), the major impact of the interest groups in the real estate market of New Jersey owes its credit to the manifold factors including the favorable conditions in the state. In his book, New Jersey: A Big Pearl House, Thompson showed that as interest groups increase by 1%, the real estate industry grows by as high as 5%. This analysis showed that the increase in the size of interest groups in New Jersey is four times directly proportional to the improvements in the real estate market of the state. Thompson also showed that the real estate industry accounts for more than 7.8% of the present improvements in the infrastructure which every citizen in the state enjoys. This only proves the huge impact of interest groups not just in the real estate industry but also in the local economy of the state. Smithso

Real Options Essay Example | Topics and Well Written Essays - 1500 words

Real Options - Essay Example Use of standard techniques to evaluate real optionsTraditionally the use of standard techniques was predominant though lacked merit in its application. The techniques included use discounted cash flows and net present value analysis. Here, future expected cash flows are treated as the present values of the empirical probability measure that reflects the risk of the project under a discounted rate. Cash flows that is expected are highly valued in this approach than any other flexible issue that alters the strategy to market goal realizations. The net present value approach presents management as being passive to their Capital investment. Most analysts account for this real option problem by adjusting the discount rates. However, real options valuation looks at management as being active and they revolve interests with varying market trends. Real options usually bring into action the best contingency plan. Management has a duty to fight any negative occurrences by lowering the possibil ities of exposure and limit the firm’s benefits from uncertainties in the market.The contingent characteristic of profits to be realized in the future of a business, in real options models is exhibited by applying financial option techniques. Using the risk-neutral measure approach comprises the reduction of the probability distribution for the risk being accounted for. Real options valuation accounts for uncertainties in the future of definite parameters that define the value of the business.