What is the Fair Rent Thales Should Have Paid ?
نویسنده
چکیده
The first account of an option trade is found in Aristotle’s Politics. Thales the Milesian is said to have purchased the right to rent the olive presses at a future point in time for a predetermined price. Although many authors in the Real Options literature make reference to Thale’s option trade, no formal discussion has yet been made. This paper provides a more detailed treatment of this issue and calculates the ratio of the option value to the market rental price of presses. Unlike common belief, derivative instruments are not recent inventions. Although it is not known exactly when the first option contract was traded, there is evidence that the Ancient Romans and Phoenicians used such contracts in shipping. Furthermore, account of an option trade is found in the writings of Aristotle. In book 1, Chapter 11 of Politics, Aristotle tells the story of Thales of Miletus (624-547 BC), one of the seven sages of the ancient world. People had been telling Thales that his philosophy was useless, since it had left him a poor man. "But he, deducing from his knowledge of stars that there would be a good crop of olives, while it was still winter raised a little capital and used it to pay deposits on all the oil-presses in Miletus and Chios, thus securing an option on their hire. This cost him only a small sum as there were no other bidders. Then the time of the harvest came and as there was a sudden and simultaneous demand for oil-presses, he hired them out at any price he liked to ask. He made a lot of money and so demonstrated that it is easy for philosophers to be rich, if they want to; Corresponding author is Makropoulou, 47A Evelpidon & 33 Lefkados, 113 62 Athens, Greece. tel. +30.210.8203.862, fax. +30.210.8828.078, [email protected]
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