Valuing lease contracts under incomplete information: a real-options approach.: An article from: Engineering Economist

This digital document is an article from Engineering Economist, published by Institute of Industrial Engineers, Inc. (IIE) on June 22, 2002. The length of the article is 6869 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

From the author: This paper presents a unified framework for the pricing of leasing contracts in an option framework within incomplete information. Incomplete information is defined in the context of Merton's (1987) simple model of capital market equilibrium with incomplete information. Information costs are also used in Bellalah (1999, 2001, 2002) models for the pricing of derivative assets in the presence of shadow costs of incomplete information. The model is based on the main concepts behind interest rate models. It can be used to determine equilibrium lease rates for different types of leases such as forward leases, leases with options to renew or cancel, lease insurance contracts, adjustable rate leases, and leases with payments contingent on asset usage.

Citation Details
Title: Valuing lease contracts under incomplete information: a real-options approach.
Author: Mondher Bellalah
Publication:Engineering Economist (Refereed)
Date: June 22, 2002
Publisher: Institute of Industrial Engineers, Inc. (IIE)
Volume: 47 Issue: 2 Page: 194(19)

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