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Environmental Measurement and Evaluation VI

Prof. Akira Maeda

Course Title

Investment Theory and Economic Valuation

Course Objectives/Overview

Most energy and environmental policy and management decisions entail large-scale projects. Examples include construction of electricity generation plants, introduction and/or promotion of renewable energy sources, research and development of new technologies, etc. These projects constitute initial capital investments and subsequent economic benefits. Thus, valuing these benefits vis-à-vis the initially invested capital is one of most important phases in the course of policy formulation.
In this lecture, the students will learn the theory of investment. The theory includes fundamental principles of investment as well as methodologies for economic valuation of investment activities. It is constructed on the basis of microeconomics, finance, operations research, and other social science disciplines. Thus, the lecture also works as a review of these subjects.


1. Introduction
2. Cash flows
3. Present value and interest
4. Fixed-income securities
5. Immunization
6. Random returns
7. Portfolio optimization
8. The capital asset pricing model
9. Expected utility theory
10. Risk-neutral pricing
11. Option theory
12. Derivative pricing
13. Optimal portfolio growth

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