Kerry Back (Rice University’s Jones Graduate School of Business) will deliver a mini lecture series for young researchers of four 90 minute seminars with discussion time. The spread over a two week period.

Wed 8 May 2013 – 10:00-11:30 seminar followed by refreshments and discussion time

Thur 9 May 2013 – 10:00-11:30 seminar followed by refreshments and discussion time

Mon 13 May 2013 – 10:00-11:30 seminar followed by refreshments and discussion time

Thurs 16 May 2013 – 10:00-11:30 seminar followed by refreshments and discussion time

Adjustments to physical capital and to the capital structure of a firm share the feature that they are costly. When adjustments are costly, firms will only rarely be at their static optima. Consequently, static theories may fit the data poorly. The cost of adjustment also affects the risk of the firm and consequently the expected returns of its securities. In particular, firms with high book-to-market values are probably firms with surplus capital who can respond strongly to an uptick of the economy and therefore have riskier stocks.

When it is costly to reverse a decision, then it can be considered the exercise of an option. For example, physical investment can be understood as the exercise of a real option. Therefore, the tools of option pricing theory are useful.

Registration for this event is free to University of Oxford Postgraduate Students and Faculty, OMI Associates and Members.

Industry places are available – please contact events@oxford-man.ox.ac.uk for more information.

Lecture1

Lecture2

Lecture3

Lecture4