The Space Value of Money: Rethinking Finance Beyond Risk & Time Armen V. Papazian Full Chapter Instant Download
The Space Value of Money: Rethinking Finance Beyond Risk & Time Armen V. Papazian Full Chapter Instant Download
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the space value
of money
Rethinking Finance
Beyond Risk & Time
Armen V. Papazian
The Space Value of Money
Armen V. Papazian
This Palgrave Macmillan imprint is published by the registered company Springer Nature Limited
The registered company address is: The Campus, 4 Crinan Street, London, N1 9XW, United Kingdom
E pur si muove…1
1 ‘And yet it moves’, refers to the Earth and is attributed to Galileo Galilei (1564–1642).
To my children,
Dare to imagine fearlessly, love unconditionally, and create responsibly.
Preface
Finance, just like all human inventions, is designed and structured in human
reason and imagination first. It is actualised, institutionalised, and digitised,
in some shape or form, perfectly or imperfectly, only after its purpose, prin-
ciples, tools, and models have been defined, debated, and negotiated in
society.
Digitisation does not automatically imply improvement. An unfair and
unequal process can remain so after digitisation. The architecture of our
markets, the procedural mechanisms behind money creation, the principles
and equations of a valuation model change not when they are digitised, but
when they are reinterpreted in their fundamental assumptions, and are rebuilt
upon an entirely new value framework. In the age of digital transforma-
tion, we are more than ever exposed to the risk of digitising confusion, and
reinforcing suboptimal frameworks, structures, and models.
As the world becomes more aware of the devastating impact of climate
change and recognises that we have littered every environment we have come
to touch—debris in orbit, carbon in air, plastic in oceans, waste in rivers and
on land—the necessity for change has become a mainstream agenda. What-
ever the perceived and real levels of commitment, the growth in sustainable
finance is a testimony to this parallel and simultaneous transformation.
This book is a theoretical treatise on sustainability in finance and aims to
contribute to the debate. The main argument and purpose are straightfor-
ward. If we are to ensure an effective transition, and a long-term change in
our trajectory, we must integrate sustainability into the core principles and
ix
x Preface
xiii
xiv Acknowledgments
late grandparents, Dr. Papken and Arminée Papazian, and Aram and Sato
Amassian, their bold kindness and example have been a guiding light.
I owe special thanks to Tula Weis for her patience and strategic support,
she has played a central role in bringing this book to light, to Faith Su for
reviewing the manuscript and making sure everything is as it should be, and
to Pete Baker for recognising the theoretical and practical relevance of my
work and making this publication possible.
I owe special thanks to Dr. Keith Carne, Prof. Gishan Dissanaike, Lt
Col. Peter Garretson, Daud Vicary, Dr. Pascal Blanqué, Domenico del Re,
Dr. Salvatore Russo, Prof. Christine Hauskeller, Dr. Saker Nusseibeh, Giotto
Castelli, Adrian Webb, and Dr. Jonathan Bonello, for their support, for
reviewing the early drafts of this book, for feedback and discussions, for
providing reviews.
I am grateful to the following individuals for their direct and/or indirect
contributions, recently or in the past:
Prof. Dame Sandra Dawson, Dr. Mark Carney, Prof. Geoff Meeks, Prof.
Arnoud De Meyer, Prof. Ha-Joon Chang, Dr. Robin Chatterjee, Dr. Jose
Gabriel Palma, Prof. Tony Lawson, Prof. Geoffrey Hodgson, Prof. Pierre-
Charles Pradier, Prof. Peter Nolan, Prof Shailaja Fennell, Prof. Richard
Barker, Dr. Rachel Armstrong, Dr. Richard Obousy, Kelvin F. Long, Dr. Ian
J. O’Neill, Amalie Sinclair, John Lee, Prof. Pier Marzocca, Prof. Dirk Schulze-
Makuch, Prof. Joseph Miller, Charles Radley, Giorgio Gaviraghi, Eric Klein,
David Brin, Prof. Edward Guinan, Dr. Cathy W. Swan, Prof. Peter A. Swan,
Dr. Jose Cordeiro, Dr. Robert L. Frantz, Prof. Weilian Su, Dr. Mae Jemison,
Dr. David Livingston, Michael Laine, Dr. Eric Davis, Marc G. Millis, Paul
Gilster, John Davies, Dr. Andreas Hein, Robert Swinney, Patrick Mahon,
Robert Kennedy III, Angelo Genovese, Prof. Gregory Matloff, Mike Mongo,
Prof. Mauricio Talebi Gomes, Dr. Riccardo Vitale, Dr. Tara Cornish, Dr.
Tarek Mady, Dr. Shiyun Wang, George Littlejohn, Tony Manwaring, Richard
Spencer, Prof. Harold Chorney, Dr. Seishi Kimura, and Dr. Everett Price.
I am also grateful to the many colleagues, students, friends, and family who
have contributed to the wealth and depth of my learning and experiences over
the years. I have learned so much from so many.
While all are to be thanked, mistakes remain my own.
Contents
1 Introduction 1
References 11
2 Finance: A Value Paradigm and Equations Without Space 17
2.1 The Risk and Time Value of Money 18
2.1.1 Discounting Cash Flows and the Net Present
Value Model 22
2.1.2 Company and Stock Valuation Models 24
2.1.3 The CAPM: Capital Asset Pricing Model 30
2.1.4 The Sharpe Ratio 31
2.1.5 The Arbitrage Pricing Theory and Three Factor
Model 32
2.1.6 Market Efficiency, Anomalies, and Risk-Adjusted
Abnormal Returns 33
2.1.7 The Modigliani Miller Theorem and Corporate
Investment 36
2.1.8 The Black and Scholes Option Pricing Model 37
2.1.9 Technical Analysis & Comparables 38
2.2 Space in Finance 39
2.3 Externalities 40
2.4 Conclusion 42
References 43
xv
xvi Contents
Index 251
About the Author
xix
xx About the Author
AI Artificial Intelligence
APF Asset Purchase Facility
APT Arbitrage Pricing Theory
ASTP Advanced Space Transportation Program
AT Algorithmic Trading
BIM Biodiversity Impact Metric
CAA Climate Ambition Alliance
CAPM Capital Asset Pricing Model
CBD Convention on Biological Diversity
CCC Climate Change Committee
CDE Carbon Dioxide Equivalency
CDO Collateralised Debt Obligations
CDP Carbon Disclosure Project
CDSB Climate Disclosure Standards Board
CE Credit Easing
CGFI UK Centre for Greening Finance and Investment
CGFI-SFI UK Centre for Greening Finance and Investment, Spatial Finance
Initiative
CISL Cambridge Institute for Sustainability Leadership
COP26 UN’s 26th Conference of the Parties
CPI Climate Project Initiative
DCF Discounted Cash Flow
DDM Dividends Discount Model
DOJ Department of Justice
EA Environmental Agency
xxi
xxii Abbreviations
— Ei, suomalaisia.
— Ei.
Matruusi hymyilee.
*****
Kello puoli kaksitoista kiintyvät katseemme laivan savutorvissa
oleviin merkinantolaitteisiin. Niissä alkaa punainen sähkölamppuvyö
kipinöidä. Torpeedo ilmoittaa nähtävästi tulostaan.
Se on risteilijä Augsburg.
— Sota-aika, vastataan.
*****
— Ajatelkaa, pojat, miten kamalata olisi ollut, jos joku olisi jäänyt
ammuttavaan laivaan?
On saapunut sotasähkösanomia.
*****
*****
Vihdoin komennetaan:
— Seis!