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The Two-Factor Evaluating Model of Coal Resources Mining Rights Based on Vasicek Interest Rate

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2 Author(s)
Zou Shaohui ; Sch. of Manage., Xi'an Univ. of Sci. & Technol., Xi'an, China ; Zhang Jinsuo

In China, evaluating coal resources mining right (for short MRCR) scientifically and effectively is a key and precondition of acquiring and transferring it. MRCR has the same option-like characteristics as stock call option, which is a multi-period call option exercised annually, thus evaluation methods of MRCR based on option can reflect the option-like characteristics of MRCR. Previous researches often assume that the risk-free interest rate is constant. In fact, the fluctuation of risk-free interest rates can directly affect the value of MRCR, empirical researches show that Vasicek interest rate can better fit the changing tendency of risk-free interest rate in China. A two-factor model evaluating MRCR based on Vasicek interest rate is set up. Through a practical instance, it' s tested that the two-factor model, compared with DCF, can better reflect government' s income as the owner of the resources. The value of this MRCR declines as the mean-reverting coefficient increases.

Published in:

2009 International Conference on Information Management, Innovation Management and Industrial Engineering  (Volume:4 )

Date of Conference:

26-27 Dec. 2009