Stochastic Analysis for Assessment of Asset Value Changes in Oando, PLC

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Published: 2023-09-11

Page: 345-356


Azor P. A. *

Department of Mathematics & Statistics, Federal University, Otuoke, Nigeria.

Emomotimi A. T.

Department of Mathematics & Statistics, Federal University, Otuoke, Nigeria.

Amadi I. U.

Department of Mathematics & Statistics, Captain Elechi Amadi Polytechnics, Port Harcourt, Nigeria.

*Author to whom correspondence should be addressed.


Abstract

Assessment of assets is a process used by companies to allocate their resources between present and future. The importance of asset evaluation is to ensure that the assets are carried at no more than their recoverable amount and to define how recoverable amount is determined. In this paper valuation analysis of the asset is done using normal and lognormal distributions. As a result a stochastic model of asset value functions is considered. A Close form analytical solutions were obtained by means of Ito’s theorem which gave precise measures and conditions of generating asset values through lognormal and normal distributions. The effects of time on asset values were critically examined and results shows as follows:  an increase in time significantly increases the value of asset returns for both distributions; the return rate that follows normal distribution is the best in terms of precisions and it also connotes that investment plans and its profits making generally follows a normal distribution; a little increase in time when the expected return rates are fixed; significantly increases its asset values. That is to say, that lognormal distribution is highly influenced by time factors while normal distribution is not dominated by time which implies that it has short or little rate of convergence; lognormal plots are unstable as they reach the optimum levels while normal plots are stable throughout the period of trading and can be predicted to enhance effective running of investments over time. To this end, all this are purposes of investment plans as it affects asset value functions in financial market.

Keywords: Asset value, lognormal and normal distributions, SDEs and stochastic analysis


How to Cite

Azor P. A., Emomotimi A. T., & Amadi I. U. (2023). Stochastic Analysis for Assessment of Asset Value Changes in Oando, PLC. Asian Journal of Pure and Applied Mathematics, 5(1), 345–356. Retrieved from https://globalpresshub.com/index.php/AJPAM/article/view/1857

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