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Discussion of arbitrage-free valuation of exhaustible resource firms

Research output: Contribution to journalJournal articlepeer-review

<mark>Journal publication date</mark>1/11/1998
<mark>Journal</mark>Journal of Business Finance and Accounting
Issue number9-10
Number of pages5
Pages (from-to)1391-1395
Publication StatusPublished
<mark>Original language</mark>English


In summary, if equity markets value firms using some latent pricing model, many aspects of which can be captured by multifactor models, we should be able to recover model parameters from observed equity values and futures prices.Thus theHotelling Valuation Principle can be extended to incorporate risk pricing and multiple uncertainties in which setting futures play a special role as certainty equivalents. The paper by Lehocky and Paxson marks one such examination of a firm's value and will no doubt stimulate more.