Keywords
Capital budget, Capital investments, Skewness in return distributions, Third moment analysis, Capital rationing models, Subjective probability distributions, Periodic investment decision-making
Abstract
When investment projects are described by subjective probability distributions, the measure of investment worth becomes a difficult task. One of the basic assumptions underlying investment analysis under risk is that decision makers would base their decisions on only the first two statistical moments of the probability distribution of returns. However, the mean and variance can adequately describe only certain symmetric distributions such as the normal and the uniform distributions. As a result, if probability distributions of investment returns are actually asymmetric, the classic first two moments analysis ignores information (skewness) that is needed to make a better investment decision. Even though the importance of the third moment in project selection has been recognized, nowhere in the literature is there a successful application of the concept to a regular periodic decision process where the decision maker lacks full knowledge of his future as well as present investment opportunities. Therefore, it is the purpose of this research to investigate the effectiveness of utilizing the higher statistical moments in capital rationing situation.
Notes
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Graduation Date
Spring 1980
Advisor
Park, Chan S.
Degree
Master of Science (M.S.)
College
College of Engineering
Degree Program
Engineering
Format
Pages
85 pages
Language
English
Rights
Public Domain
Length of Campus-only Access
None
Access Status
Masters Thesis (Open Access)
Identifier
DP0013349
Subjects
Capital budget; Capital investments; Investments--Decision making--Statistical methods; Capital investments--Decision making--Mathematical models; Investment analysis--Mathematical models; Capital investments--Statistical methods; Investments--Decision making--Mathematics
STARS Citation
Ekere, Edet Jonathan, "The Effects of Introducing Skewness into Capital Rationing Decision Models" (1980). Retrospective Theses and Dissertations. 480.
https://stars.library.ucf.edu/rtd/480
Contributor (Linked data)
Park, Chan S. [VIAF]
Park, Chan S. [LC]
University of Central Florida. College of Engineering [VIAF]
Collection (Linked data)
Accessibility Status
Searchable text