An Application Study of Valuation of Compound Options in the Bio-pharmaceutical Project

It is a problem to be solved urgently in practice that what kind of method should be used to evaluate Bio-pharmaceutical Projects.Based on the discussion that Bio-pharmaceutical Project has characteristics of Compound Real Options(CRO),this paper argues that the pricing model of Compound Options should be used as the method for the evaluation of Bio-pharmaceutical Project,and explains how to use the Geske model to evaluate the Bio-pharmaceutical Project through an example.