Operating Expense (OPEX)

Daily operating costs include the cost of Crew, Spare Parts, Insurance.  The expenses of Drydocking and Special Survey are also operating costs. Always remember to check if daily operating expense quoted is including provision for DD/SS.

For financial analysis and modelling of ship investments, the cost of off-hire should also take into account.

For ships on time-charter, the charterer pays … Read the rest

Monte Carlo simulation

Monte Carlo simulation is a computerized mathematical technique used to analyze risk. Monte Carlo simulation performs risk analysis by building computer models of possible results by substituting a range of values—a probability distribution—for any factor that has uncertainty. It then calculates results over and over, each time using a different set of random values from the specified probability function for … Read the rest

Ships as investments

Ships as investments have many features similar to marketable financial instruments like shares, bonds, or traded options:

  1. The market price of a ship can be interpreted as the present value of the expected cash flow from the ship during its remaining economic life, discounted at a rate of return that reflects the market’s perception (pricing) of downside risks and upside
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