A singular stochastic control problem

Abstract

In this chapter the main focus lies on investigating and reproducing the paper “Capital supply uncertainty, cash holdings, and, investment” by Hugonnier et al. [6]. This paper models a financial environment, where the considered firm has to optimize its capital policy under some assumptions about availability of outside financing and investment opportunities. This optimization is done due to control of the dividends paid to the shareholders, the financing strategy and the investment strategy.