RT Journal Article
T1 Valuing the Option to Purchase an Asset at a Proportional Discount: A Correction
A1 F. Navas, Javier
K1 Option pricing
K1 Proportional-strike options
K1 Employee compensation package
AB Gu (2002) introduces proportional-strike options to study a residential real estate program in China. Under this program, a state employee can buy her house at a fraction of the market price. The employee can also qualify for a subsidized mortgage. Given that the homeowner has the option, but not the obligation, of taking the subsidy, we show that the solution of the housing problem derived by Gu can be wrong. We provide a numerical example to illustrate the point.
PB Elsevier
YR 2009
FD 2009-05-01
LK https://hdl.handle.net/10433/21684
UL https://hdl.handle.net/10433/21684
LA en
NO The Quarterly Review of Economics and Finance, Volume 49, Issue 2, Pages 720-724 (2009)
NO Departamento de Economía Financiera y Contabilidad
DS RIO
RD May 22, 2026