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Application of the Fuzzy-Pay-Off Method in the Valuation of a Financial Instrument

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Soft Computing Applications (SOFA 2016)

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 634))

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Abstract

The current article aims to present the application of the Fuzzy-Pay-Off Method within the valuation of a financial instrument (FI), more specifically a patent. The Fuzzy-Pay-Off Method (FPOM) will be presented alongside the mathematical model on which it is based on, also adding a short description of what the concept of Fuzzy number represents. The advantages and disadvantages of this valuation method will be outlined. The case study accompanying this work will refer to the valuation of a patent using the FPOM based on the analysis of a discounted cash flow (DCF). All work hypotheses are based on three scenarios: an optimist one, a pessimist one and a realist one. These scenarios are the basis upon which a research and development (R&D) project shall be initiated. It is possible for the FPOM to be used as an extension to the common DCF method.

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Acknowledgement

This paper would not have been written without the help of several colleagues who offered their knowledge and unconditional support. Also special thanks to the family and best friends who have always been there for us.

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Authors and Affiliations

  1. Electrical and Power Engineering Faculty, Politehnica University Timisoara, Timisoara, Romania

    Mihaela Crăciun

  2. Department of Economics, Faculty of Economic Sciences, “Aurel Vlaicu” University of Arad, Arad, Romania

    Luiela Magdalena Csorba

Authors
  1. Mihaela Crăciun
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  2. Luiela Magdalena Csorba
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Corresponding author

Correspondence to Mihaela Crăciun .

Editor information

Editors and Affiliations

  1. Department of Automatics and Applied Informatics, Faculty of Engineering, Aurel Vlaicu University of Arad, Arad, Romania

    Valentina Emilia Balas

  2. University of Canberra, Canberra, South Australia, Australia

    Lakhmi C. Jain

  3. Universitatea Aurel Vlaicu Din Arad, Arad, Romania

    Marius Mircea Balas

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Crăciun, M., Csorba, L.M. (2018). Application of the Fuzzy-Pay-Off Method in the Valuation of a Financial Instrument. In: Balas, V., Jain, L., Balas, M. (eds) Soft Computing Applications. SOFA 2016. Advances in Intelligent Systems and Computing, vol 634. Springer, Cham. https://doi.org/10.1007/978-3-319-62524-9_19

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  • DOI: https://doi.org/10.1007/978-3-319-62524-9_19

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-62523-2

  • Online ISBN: 978-3-319-62524-9

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