Purpose – The purpose of this paper is to investigate how asset risk (i.e. the risk that the value of the leased asset loses unexpectedly most of its value at the end of the contract) is measured and hedged. Design/methodology/approach – The evaluation of the lease contract is achieved by applying the theory of option pricing as the lessor is the writer of a call option on the leased asset. A sensitivity analysis on some parameters is performed. Findings – The paper disentangles the components of the profit of a lease contract and allows to choose the optimal final purchase price. This lets the lessor hedge against asset risk. Research limitations/implications – The paper’s result can be extended by considering more complex options (such as American or exotic ones) into the lease contract. Practical implications – Results in the paper allow for a more flexible and efficient management of lease contracts where both parties benefit under an economic and a financial point of view. Originality/value – This is believed to be the first paper that applies derivative evaluation to the analysis of lease contracts. Keywords Assets management, Leasing, Pricing, Profit, Hedging.

Pricing and net profit of operating lease / Tagliavini, Giulio; Moretto, E.. - In: MANAGERIAL FINANCE. - ISSN 0307-4358. - 35:(2009), pp. 828-840.

Pricing and net profit of operating lease

TAGLIAVINI, Giulio;
2009-01-01

Abstract

Purpose – The purpose of this paper is to investigate how asset risk (i.e. the risk that the value of the leased asset loses unexpectedly most of its value at the end of the contract) is measured and hedged. Design/methodology/approach – The evaluation of the lease contract is achieved by applying the theory of option pricing as the lessor is the writer of a call option on the leased asset. A sensitivity analysis on some parameters is performed. Findings – The paper disentangles the components of the profit of a lease contract and allows to choose the optimal final purchase price. This lets the lessor hedge against asset risk. Research limitations/implications – The paper’s result can be extended by considering more complex options (such as American or exotic ones) into the lease contract. Practical implications – Results in the paper allow for a more flexible and efficient management of lease contracts where both parties benefit under an economic and a financial point of view. Originality/value – This is believed to be the first paper that applies derivative evaluation to the analysis of lease contracts. Keywords Assets management, Leasing, Pricing, Profit, Hedging.
2009
Pricing and net profit of operating lease / Tagliavini, Giulio; Moretto, E.. - In: MANAGERIAL FINANCE. - ISSN 0307-4358. - 35:(2009), pp. 828-840.
File in questo prodotto:
File Dimensione Formato  
PricingAndNetProfitOfOperatingLease_0090351001.pdf

non disponibili

Tipologia: Documento in Post-print
Licenza: Creative commons
Dimensione 223.95 kB
Formato Adobe PDF
223.95 kB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11381/2281237
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 0
  • ???jsp.display-item.citation.isi??? ND
social impact