Title :
Study and application of military software pricing based on option pricing
Author :
Qin, Wu ; Ruxiang, Wei
Author_Institution :
Dept. of Equip. Econ. & Manage., Naval Univ. of Eng., Wuhan, China
Abstract :
The idea of real option is applied in military software pricing in this paper. By redefinition and combination of the two typical option pricing models (Black-Scholes model and binomial tree model), we find out that option value of military software is estimated software cost. Since the crucial variable of Black-Scholes model is the volatility whose value can be estimated with the method of Monte Carlo analogy. At last, the application of this military software pricing model is demonstrated in a real case.
Keywords :
Monte Carlo methods; binomial distribution; military computing; pricing; software cost estimation; trees (mathematics); Black-Scholes model; Monte Carlo method; binomial tree model; military software pricing; option pricing; software cost estimation; Biological system modeling; Equations; Mathematical model; Monte Carlo methods; Pricing; Programming; Software; Black-Scholes model; Monte Carlo analogy; binomial tree model; estimated cost; military software pricing; value of software option; volatility;
Conference_Titel :
Software Technology and Engineering (ICSTE), 2010 2nd International Conference on
Conference_Location :
San Juan, PR
Print_ISBN :
978-1-4244-8667-0
Electronic_ISBN :
978-1-4244-8666-3
DOI :
10.1109/ICSTE.2010.5608793
