Exotic Option-based Rural Land-use Right Pricing Model
New Chinese rural reform and development strategy necessitates an open transfer market for rural landuse right. However, present evaluation approaches fail to reflect the fair market value of rural landuse right, which not only restricts the efficient rural land market development, but also injures the farmers’ interests. Therefore, exotic option pricing method is employed into the pricing model of rural landuse right, which is now liberalized into the market as a main factor of production in agricultural sector. The pricing model highlights that the value of rural landuse right consists of income value and capital value, and build the equivalent portfolio to the underlying assets based on the financial engineering principle. The value of underlying assets is decomposed to the portfolio of two securities with existing evaluationfloating rate securities, and American real call option. The model argues that the net present value (NPV) of annual agricultural income on the rural land is uncertain due to the fluctuation of crop prices, and takes into consideration the potential capital gain from the contingent rural landuse right conversion, i.e. from rural land to urban land. The model not only gives new insights of the value composition of Chinese rural landuse right, but also incorporates the residual term of rural landuse right and accrued agricultural investment on the rural land, which can improve the pricing efficiency of the promising rural land market by the analytical expression.
exotic option pricing rural land-use right real option
LU Yong-heng
College of Economics and Management Heilongjiang Institute of Science and Technology Harbin, China
国际会议
成都
英文
1-5
2010-04-16（万方平台首次上网日期，不代表论文的发表时间）