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This paper deals with the optimal timing of power generation investments in the second year of the global COVID-19 pandemic. The research applies the real options methodology during the investment decision-making process and takes, besides a proper uncertainty assessment, the project embedded flexibilities into account. Timing flexibility is discussed thoroughly, and the issue of optimal exercise, the timing of the highest potential value creation is examined through a static and dynamic lens. The authors' initial hypothesis presumed uncertainty as the most influential parameter measured by the project's standard deviation. Timing flexibility, optimal timing is analyzed compared to and concerning this volatility. Static and real options-based dynamic investment timing models are being tested in the power generation industry. Of particular interest of the research is whether results could prove the phenomena of renewable technologies being the safe haven of energy investments after the sector became highly volatile due to the COVID-19 pandemic. Results show that the timing of real options and the value will have a positive relationship. Still, the most exciting finding is that time and timing have a more substantial effect on the created value than uncertainty and further embedded growth potential (more flexibility).Keywords: real options, timing, flexibility, power generation, uncertainty JEL Classifications: G11, C41DOI: https://doi.org/10.32479/ijeep.11815

THE AIMS OF THE PAPER The population factor in general influences most of the global megatrends. While it was considered one of the major driving forces for economicgrowth in the 20th century, it has become the greatest risk factor for the socio-economic landscape. Hungary is experiencing one of the fastest demographic transitions in Europe. Due to the continued extension of longevity and the steep decline in fertility rate, the size and percentage of theelderly population (i.e., aged 65 and above) rapidly increased during the last decades. The paper aims to examine whether population ageing has an effect on asset prices in Hungary. METHODOLOGY The life cycle theory for Hungary was applied while exploring the quantitative link between population structures and asset prices, particularly onstock and bonds. In this study, the relationship between Hungary’s demographic characteristics and asset class returns will be examined by reviewing previous academic and policy studies through conducting a regression analysis of bond yields and P/E ratio of BUX Index related to demographic variables. MOST IMPORTANT RESULTS The connection between stock prices and demographic trends is impacted by the life cycle theory of asset accumulation/decumulation and portfolio choice. In Hungary, the younger adults between 36 and 45, and the classic middle-aged individuals are in their peak savings years and invest heavily in stocks, driving up stock prices. The old-aged individuals decumulate assets and sell stocks to finance their retirement, depressing stock prices. In addition, the investors become more risk-averse and prefer fewer holdings of stocks as they grow older. The Middle/Old ratio and the BUX P/E ratio have a strong positive correlation during the period 1995-2020. The bond yields show a similar connection with the Yuppie/Nerd ratio. The results of demographic variables predicting bond-yields are strong and proving the international patterns. RECOMMENDATIONS The paper highlighted that the demographic variables are not only appropriate for socio-demographic analysis since the members of the different age groups have their own consumption, saving and investing characteristics that can have an impact on the asset prices besides other commonly usedparameters. Acknowledgements: This article was supported by EFOP­3.6.1­16­2016­00004 that has been entitled ‘Comprehensive developments at the University of Pécs for smart specialization’. (Project element ‘Decision­making at older ages’, topic no. 11)

Venture capital investments play an important role in the development and growth of start-up companies that are characterized by a high degree of uncertainty and growth potential, and venture capital is also one of the major sources of financing for entrepreneurial businesses. In the case of venture capital investment, staging has a huge potential, so the venture capitalists keep the right to participate in further financing rounds. The real option approach as an evaluation method provides an opportunity to evaluate this kind of investment with the help of flexibility in the case of a high degree of uncertainty. The paper puts the emphasis on the evaluation and the effectiveness of venture capital investments primarily from the aspect of real option theory tested on Hungarian venture capital cases. The paper concludes that the option-based valuation methods are more suitable for evaluating venture capital investments than others, especially the discounted cash flow method.

THE AIMS OF THE PAPER This study attempts to explore the links between venture capital (VC) investments and the real option approach (ROA) with analyzing the characteristic features of the venture capital investments and their process. The real options can be examined as a way of thinking and evaluation method and the study’s aim is to show that real option approach can provide an answer to the valuation challenges of venture capital investments. METHODOLOGY The choice of the appropriate valuation method requires consideration of its conditions of application, which, in the case of real option theory, result from the examination of uncertainty, flexibility and irreversibility. The venture capital investments are characterized by a high degree of uncertainty and risk, which can also be traced back to the provision of financing to innovative, early-stage companies. Real option theory also provides venture capital investors with professional experience through their active role in decision-making. The study evaluates a Hungarian start-up company venture capital investment with the help of a traditional discounted cash flow method and two real option valuation models: Black – Scholes model and binomial pricing model. Then a sensitivity analysis is prepared to analyze the value driver effect on option value and a volatility analysis to verify the importance of high-degree of uncertainty in real option valuation. MOST IMPORTANT RESULTS The paper concludes that the option-based valuation methods are more suitable for evaluating venture capital investments than other approaches such as the discounted cash flow methods, and the embedded flexibility can be determined by the real option approach. The binomial pricing model points out the advantages of staging investments with the higher real (call) option value. Besides the real option valuation, the sensitivity analysis shows a positive effect of the present value of the underlying assets, the time to maturity, the risk-free interest rate and volatility on the call option value. The analysis of the volatility emphasizes the importance of the degree of uncertainty in real option valuation. RECOMMENDATIONS The real option approach ensures proper evaluation of venture capital investment, avoiding the undervaluation and taking advantage of staging and timing investments in practice. Acknowledgment: Supported by the UNKP-19-3 New National Excellence Program of the Ministry for Innovation and Technology.

THE AIMS OF THE STUDY Real option theory has been analyzed for more than forty years in more industries and research areas but some of these have received less attention. One potential but yet untapped area of real option theory application is the business incubation process, which can be a key success factor of start-up companies. The study focuses on the business incubation process and the real option theory and aims to present the steps of the business incubation process and the decision-making phases for both the business incubator and the participants, and to develop a framework that ensures the efficient operation of incubators. METHODOLOGY By exploiting and modelling uncertainty and managerial flexibility I examine the opportunities in business incubation process applying real option theory. In the course of the qualitative analysis I identify the different types of real options inherent in the business incubation process and determine the benefits of applying them as well as emphasizing their positive features. MOST IMPORTANT RESULTS Although many literature review sources treat incubation process models with a "black box" approach, considering the model process and its structure-oriented nature enables its in-depth analysis and conclusion about the potential in the incubation process. In the process we can also identify timing, staging, contract and growth real options and exercising or discarding these options ensures corporate value creation. RECOMMENDATION Identifying and exploiting real options gives scope for business incubators to achieve operational effectiveness and value-creation. They study and the subsequent research provide new approach to practitioners, including the real option logic and use real option valuation.

The start-up companies’ evaluation needs to start with the analysis of the business incubation process. Business incubation has the potential to apply real options that support the identification and exploitation of possible new businesses and can be the new start-ups’ source of success. The incubator could be described as an entrepreneurial firm that creates real options by selecting new, young or emerging ventures and it could exercise these real options by monitoring and coaching the participants through different development stages. The business incubators’ intensive business support activities are comparable to the realization of investment projects characterized by a high degree of uncertainty and decision-making flexibility, which are carried out by companies operating in a dynamic market environment. The aims of the paper are to systematically review the literature on business incubation and its process and to find the real options that can generate value creation and higher efficiency through exploring and analyzing the activities, programs and incubation process of selected Hungarian incubators., Evaluacija startup poduzeća, tj. poduzeća u razvoju mora početi s analizom procesa poslovne inkubacije. Poslovna (poduzetnička) inkubacija sadrži potencijal za implementiranjem stvarnih opcija koje podržavaju identifikaciju i iskorištavanje mogućih novih poslovanja i može biti novi izvor uspjeha startup poduzeća. Inkubatora se može opisati kao poduzetničku tvrtku koja kreira stvarne opcije putem selekcije novih, mladih poduzeća i poduzeća u nastajanju i može upotrebljavati te stvarne opcije putem praćenja i podučavanja sudionika tijekom raznih faza razvoja. Aktivnosti potpore u poslovanju od strane poslovnih inkubatora se mogu usporediti s realizacijom investicijskih projekata koji su okarakterizirani visokim stupnjem nesigurnosti i fleksibilnosti donošenja odluka, koje poduzimaju poduzeća koja djeluju u dinamičkom tržišnom okruženju. Ciljevi ovog članka su sistematički razmotriti i procijeniti literaturu o poslovnoj inkubaciji i njenom procesu, kao i doći do stvarnih opcija koje generiraju stvaranje vrijednosti i veću efikasnost pomoću istraživanja i analize aktivnosti, programa i inkubacijskog procesa odabranih Mađarskih inkubatora.