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Alternative Investments:
Alternative Energy and Oil: Literature review

Kevin Meyer, Kevin@meyermail.ch Submitted 12/04/2010

Executive Summary
Research Purpose
In order to build a financial product on a sound theoretical basis, I analysed the literature available on or related to the topic: “Alternative energy and Oil”. The aim is to verify the hypothesis of correlation between the variations of the price of oil and alternative energy companies‟ stock valuation.

Research Design
I searched on internet (Google scholar, SSRN, P&P) for papers related to the topic (selected by number of quotes), and went across a comprehensive analysis of the sub-topics present in the studies. I then looked at the similarity or contradictions in the conclusions and presented the regression methodology.

Findings
The available literature on the topic, to this day, seems to agree to a positive and significant Beta on the variation of the price of oil, when looking at the alternative energy companies‟ stock value.

Research Limitations
There are only three papers directly related to the specific topic, all the other analysed papers giving more depth to the subject but not answering the original question. Also, the turmoil of the financial market of the past years has provoked perturbations which make predictions less accurate.

Research Implications
In the papers analysed, all academics and professionals agree to the fact that alternative energy will develop in the future as a necessity. It is important for an investor to understand the role that this sub-sector will play in the future. Furthermore, the role of the variation of the price of oil on the value of alternative energy companies‟ stock value is important and has to be taken in account when investing in these companies.

Originality and Value
Due to the recency of the topic, very little conclusions have been made on the subject. By analysing the most recent and important papers on the broad topic and all the papers on the specific subject, I merged the conclusions of all the authors in this short paper. By reading this literature review, an academic or professional will have a sound understanding of the role and determinants of the alternative energy market.

Literature review: Alternative energy and oil

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Table of Contents Alternative Energy and Oil: .......................................................................... 1 Executive Summary .................................................................................... 2 Research Purpose .................................................................................... 2 Research Design ...................................................................................... 2 Findings ................................................................................................. 2 Research Limitations ................................................................................ 2 Research Implications .............................................................................. 2 Originality and Value ................................................................................ 2 Introduction............................................................................................... 3 Ecological footprint ..................................................................................... 4 Price of Oil................................................................................................. 5 Trends ................................................................................................... 5 Volatility ................................................................................................. 5 Raising demand....................................................................................... 6 Consequences for companies and individuals .............................................. 6 Markets‟ reactions...
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