The Value of Embedded Real Options : Evidence From Consumer Automobile Lease Contracts  

Oleh:

Giaccotto, Carmelo ; Goldberg, Gerson M. ; Hegde, Shantaram P.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 62 no. 1 (Feb. 2007), page 411-446.
Topik: consumer; interest rates; options trading; automobile leasing; contracts; studies
Fulltext: p 411.pdf (191.36KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

Under the common assumption of constant interest rates, we show that penalties for early termination of a lease are often structured in such a way that the cancellation option embedded in consumer automotive leases has little value. Furthermore, our estimates drawn from a sample of three popular car models over 1990 to 2000 indicate that the stand - alone value of the lease - end purchase option is, on average, about 16% of the market value of underlying used vehicles, or about $1,462 per contract. Finally, we examine the sensitivity of our option value estimates to model parameters and default risk.

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