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A210A0350 Real Options and Managerial Decision Making, 6 cr 
Code A210A0350  Validity 01.08.2011 -
Name Real Options and Managerial Decision Making  Abbreviation Real Options an 
Credits6 cr   
TypeBasic studies  
  Grading scaleStudy modules 0-5,P/F 
  Eligibility for post-graduate studiesYes
    Allowed to study several timesno
Organisation LUT School of Business and Management 

Mikael Collan 
Mariia Kozlova 
Azzurra Morreale 

Description by Study Guide

Location: Lappeenranta, full digi

For master's program students only.


M.Sc. (Econ. & Bus. Adm.) 2


3 (intensive week 9)

Teaching Language 


Teacher(s) in Charge 

Professor, D.Sc. (Econ. & Bus. Adm.) Mikael Collan
Post-doc researcher D.Eng. Azzurra Morreale
Post-doc researcher, D.Sc. (Econ. & Bus. Adm.) Mariia Kozlova


After the course the students:
- know the mathematical foundations of real options and the connections between the real options approach and financial theory
- know the research tradition of real options and are able to critically evaluate the limits of the approach
- understand and are able to critically analyze the role of uncertainty and risk in decision-making
- are able to apply the real options approach in managerial decision-making situations, and to determine whether real option analysis is suitable / needed
- know the main model types used in real option valuation
- have the ability to perform real option valuation with the fuzzy pay-off method and to construct tool for RO valuation with the method.


Core content: real options vs. financial options, modeling the real options and the limits of modeling, the usability of real options in strategic decision-making
Additional content :the use of mathematical tools applied in the real options context
Special content: how to use the real options approach in managerial decision-making situations exemplified by means of different real cases, project of constructing a simple real option valuation tool with excel or with Matlab.

Teaching Methods 

Lectures and model construction 38 h, independent reading assignments (articles) and preparation for lectures 46 h. Written exam and preparation for the exam 73 h. Peer project evaluation 2 h. Total workload for the student 160 h. Extra curricular assignment.

Suitability for doctoral studies (Yes/Leave empty) 


Examination in Examination schedule (Yes/No) 


Examination in Moodle (Yes/No) 


Examination in Exam (Yes/No) 


Assessment scale and assessment methods 

Grade 0-5, evaluation 0-100 points, written exam 80%, course project 20%.

Course Materials 

Collan, M., 2012, The Pay-Off Method: Re-Inventing Investment Analysis – With numerical application examples from different industries, CreateSpace, Charleston, SC, USA (ISBN 978-14-782-3842-3) Lecture slides, Assigned reading, collection of articles. Materials will be available in Moodle (except for the course book).


For master's program students only

Limitation for students? (Yes, number, priorities/Leave empty) 

Yes. 100, priority for MSF and MBAN students.

Places for exchange-students? (Yes, number/No) 

max 15

Places for Open University Students?(Yes, number/No) 



Current and upcoming courses
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Upcoming exams
Functions Name Type cr Teacher Timing
  Real Options and Managerial Decision Making  EXAM  Mikael Collan,
Mariia Kozlova,
Azzurra Morreale 
19.03.20thu 16.15-19.15