Finite-Horizon Reversible Investment under Multi-Factor Dynamics

By Junkee Jeon, Takwon Kim, Jinwan Park, A. Max Reppen

Rating

1500
Battle Count: 0

Relevance

6/10
While primarily focused on corporate finance (real options), the mathematical framework (singular control, double obstacle problems, multi-factor GBM) is structurally similar to portfolio optimization with transaction costs, which is highly relevant to quantitative trading.

Implementation Complexity

9/10
High complexity due to the need to solve multi-dimensional parabolic double obstacle problems numerically and the rigorous analytical requirements for verification.

Reproducibility

4/5
The paper provides detailed mathematical proofs and specifies the numerical scheme (implicit finite-difference, grid sizes, parameters) in Appendix B. However, no code repository is explicitly linked in the text provided.

About this paper

Methodology: Singular Control to Optimal Switching Correspondence. Problem types: Optimization, Portfolio Optimization, Risk Management.

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